Canada’s Bank of Montreal (BMO) has started settling transactions denominated in yuan for its North American corporate clients. BMO has become the first Canadian lender to get yuan-trade settlement approval from the People’s Bank of China, allowing its corporate clients to pay their China-based suppliers directly in the local currency. The yuan-dollar trading license, which has certain quota limits, does not allow BMO to let corporations build positions in the yuan to disburse the funds over time to their suppliers. BMO, which has to disclose all the transactions to Chinese authorities, may also launch a platform for Hong Kong’s yuan market, the CNH market.
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