Central banks of Brazil and China sign an agreement for the direct conversion of the currencies of the two countries in commercial operations

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Thus, the intermediation of the dollar will not be necessary. The BC has not yet informed when the new payment arrangement will be available to companies. The Brazilian Central Bank informed this Wednesday (29) that it signed a memorandum of understanding with the Central Bank of China (PBC) to enable a financial instrument that allows transactions to be made in yuan, Chinese currency, and converted into reais of ” faster and less costly way”. With this, it will not be necessary to intermediate commercial operations between the two countries with the North American currency, the dollar. The BC has not yet informed when the new payment arrangement will be available to companies. Since 2009, China has been Brazil’s largest trading partner. In 2022, according to official data, the trade flow (exports and imports together) reached a record of US$ 150.5 billion. According to the BC, the agreement provides for the PBC (Chinese BC) to indicate, at its discretion (by its choice) an institution authorized to operate in foreign exchange in Brazil to act as an “Offshore Clearing Bank in Brazil”. “This is a Chinese initiative already present in more than 25 countries, the first one started in Hong Kong in 2003”, informed the institution. The BC also informed that the implementation of the arrangement in the country has the potential to bring the following benefits to business models that involve the use of the yuan in Brazil: increased local liquidity of the yuan; maintenance of foreign exchange reserves in hard currency in the country; reduction of intermediaries in international payments; approximation of the local payments system to the Chinese one, with increased operational efficiency in terms of cost and time reduction. According to the Brazilian BC, the operations, within this new model, are ensured the subordination to the new foreign exchange law, to the pertinent infralegal regulations, to the legal norms referring to the authorization, regulation, supervision and sanctions of eventual business models to be developed or increased after signing the memorandum of understanding.

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