The People's Bank of China (PBOC) and the National Bank of Serbia have signed a memorandum of understanding (MoU) on establishing yuan clearing arrangements in Serbia, according to a notice issued on the website of the PBOC on Monday.

The move will help enterprises and financial institutions of the two countries to use yuan for cross-border transactions and further promote bilateral trade and investment facilitation, it said.

The yuan clearing arrangements come after China and Serbia signed a free trade agreement (FTA) in October to boost bilateral trade and business ties.

According to the Ministry of Commerce, the signing of the FTA is an important measure to implement the consensus reached by the leaders of the two countries, as well as a significant achievement of the third Belt and Road Forum for International Cooperation.

The ministry said that through the FTA, China and Serbia will achieve high-standard mutual opening up, build a new institutional arrangement for bilateral economic and trade cooperation, and create a more preferential, convenient, transparent and stable business environment for companies from the two countries, while injecting new impetus into the efforts to advance high-quality Belt and Road Initiative cooperation and deepening the China-Serbia comprehensive strategic partnership.

From 2018 to 2022, the trade volume between the two countries increased significantly, with Serbian exports to China rising 12.7 percent.

The signing of the MoU also shows that the internationalization of the yuan has made steady progress as a result of China’s improved overall national strength, financial development and opening up.

Since 2022, new yuan clearing banks have been established in Laos, Kazakhstan, Pakistan, and Brazil, enabling the optimization of the overseas yuan clearing network, according to the 2023 Yuan Internationalization Report issued by the PBOC in October.

In 2022, the total amount of cross-border yuan settlement was 42.1 trillion yuan ($5.86 trillion), a year-on-year increase of 15.1 percent, according to the report.