MUFG Bank is expected to become the first Japanese bank to be designated as a yuan clearing bank, sources said Wednesday.
Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping are likely to reach an agreement on MUFG’s designation when they meet in the city of Osaka on Thursday, the sources said.
If MUFG, a unit of Mitsubishi UFJ Financial Group Inc., is designated as a yuan clearing bank, it will be able to settle yuan-denominated transactions in Japan without using its offices in mainland China and Hong Kong.
In addition, MUFG will be able to procure yuan from its offices in China when there are shortages of the Chinese currency in the financial market.
MUFG’s designation is part of China’s efforts to promote international use of the yuan, the sources said.
MUFG will become the second foreign yuan clearing bank, after U.S. banking giant JPMorgan Chase & Co., the sources said.