The International Air Transport Association (IATA) will add the yuan to the settlement currencies available to airlines and aviation suppliers through the industry association’s clearing house, in another boost to China’s efforts to promote the internationalisation of its currency.
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Yuan settlements will be available from next month following the completion of a trial period, the association said in a statement issued on Wednesday, with domestic carriers China Southern Airlines and Xiamen Airlines the first to test the system this month.
IATA’s clearing house platform already offers users seven currencies for payments: US dollars, euros, British pounds, Swiss francs, Singapore dollars, Australian dollars and yen. It provides settlement services to 581 airlines, including 33 Chinese and foreign airlines operating in China, and processed US$63.8 billion in transactions last year.
Describing IATA’s move as “a positive development for the air transport industry in China”, Sun Yuquan, the chief financial officer of Air China, was quoted in the statement as saying the yuan’s inclusion could help avoid “costly and multiple conversions” and would speed up settlements and reduce currency exchange risks.
Allan von Mehren, a China economist at Danske Bank in Copenhagen, said IATA’s decision was another sign that China had increased its determination to “speed up” the internationalisation of the yuan.
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Another, he added, was People’s Bank of China governor Pan Gongsheng “directly pledging to promote yuan internationalisation rather than previous phrases that suggested a more gradual path”, along with its inclusion as a “strategic initiative” in the latest proposals for China’s next five-year plan.