TEMPO.CO, Jakarta - China and Malaysia have agreed to use their own currencies in their bilateral trade, thus bypassing the "traditional" practice of using the United States (US) dollar as an intermediary currency in international trade.
Local media reports both countries have agreed to create a Renmimbi Clearing Bank in Kuala Lumpur. The reports, which emerged on Tuesday, quoted the results of a meeting between Malaysian Prime Minister Datuk Seri Najib Tun Razak with Chinese President Xi Jinping and Premier Li Keqiang on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in Beijing.
The creation of the bank is the first attempt by the Malaysian State Bank to create such institution, which will allow states to clear payments for transactions in their preffered currencies.
The Renmimbi Clearing Bank will allow China and Malaysia to directly transact in Renmimbi and/or Ringgit, thus expected to reduce transactional costs between the two nations.
Najib has said that the bank's creation is in line with Malaysian and Chinese targets to increase their total trade to RM535.12 billion by 2017.
As per 2013, trade between both Malaysia and China stood at RM354.52 billion.