Bank of Japan Deputy Gov. Kiyohiko Nishimura said Wednesday that developing a market where the yen and China’s yuan could be directly exchanged would contribute to regional stability.
“One benefit will be a reduction in transaction costs, as the price will be set directly without the dollar as an intermediary. Moreover, without settlements in dollars, it would also lead to a reduction in currency settlement risks for financial institutions,” Nishimura said in a speech in Tokyo.
“As such, the development of financial and foreign-exchange markets for transactions denominated in yen and the (yuan) is an important issue for financial stability,” he added.
The amount of trade Asia’s two economic giants has expanded 2.5-fold since 2001, totaling about ¥26.5 trillion in 2010. The number of firms that have expanded their operations into China from Japan meanwhile increased by 1.5 times to about 22,000 during the same period.