By staff reporter Wang Ziwu

(Caijing.com.cn) China has yet to launch implementation guidelines for the pilot program to use the yuan in settling cross-border trade, nor identified the banks due to participate, as various agencies are still going over the details of the scheme, according to Lian Ping, chief economist at Bank of Communications.

Speaking to Caijing on May 26, Lian said it is still not possible to say exactly when the People's Bank of China, or the central bank, will officially launch the scheme. The launch of the program had widely been expected sometime in May.

China's State Council, or cabinet, gave its approval on April 8 for Shanghai and the four southern Chinese cities of Guangzhou, Shenzhen, Zhuhai and Dongguan to use the yuan to settle transactions with Hong Kong and Macau. 

There is currently no regulation prohibiting financial institutions from engaging in overseas yuan clearing though regulators have yet to officially approve such actions.

Some experts have expressed concern that the pilot program could cause massive yuan outflows and an increase in foreign exchange reserves but Lian said more foreign investors would be willing to invest in the yuan as it appreciates and it would ultimately benefit the yuan's rise as an international currency.

China's currency is still not fully convertible, and companies usually settle international transaction in US dollars or euro.

The use of the yuan in international settlements is a key step in bringing forward the currency's convertibility under the capital account, one of the goals of China's foreign exchange reforms.

The central bank is leading the drafting of the plans, with the participation of the State Administration of Foreign Exchange, State Administration of Taxation, as well as General Administration of Customs and China Banking Regulatory Commission. 

Full article in Chinese: http://www.caijing.com.cn/2009-05-26/110171606.html