Industrial and Commercial Bank of China (ICBC), the world’s largest bank by assets, has become a settlement bank for the Dubai Gold & Commodities Exchange (DGCX), the exchange said Tuesday, allowing more investors to clear transactions in RMB Yuan.
ICBC becomes the 2nd Chinese bank to join DGCX’s wholly-owned subsidiary, Dubai Commodities Clearing Corporation, as a clearing and settlement bank. Bank of China became a member in March.
The 4 other settlement banks are Dubai-based Emirates NBD, Standard Chartered, HSBC and India’s Bank of Baroda.
“The association will facilitate adequate yuan liquidity for trading and investment between the local and Chinese economies. This will also lead the way for future product developments,” said Zhou Xiaodong, general manager of ICBC’s Abu Dhabi branch.
Via ICBC members of Dubai Commodities Clearing Corporation will be able to open settlement bank accounts and process settlement obligations for RMB Yuan-denominated trades as well as use other services, DGCX said.
Links between the exchange and China have grown recently, with DGCX signing a deal last month to become the 1st foreign market platform to use the Shanghai Gold Exchange’s new RMB Yuan-based Gold fix to develop derivative products.
Prospects for the future use of the RMB Yuan in trade between the UAE and China received a boost in September after the operator of China’s foreign exchange trading platform said it had agreed to establish direct trading for the 2 pairs, starting on 26 September.
Previously, trade occurred indirectly through 3rd currencies such as the USD.