Deutsche Bank has been appointed by China as a renminbi clearing bank in Europe, making it the first European financial institution to receive the mandate and strengthening financial links between the region and the world’s second-largest economy.

The German lender said on Monday that the appointment by the People’s Bank of China (PBoC) would allow it to provide direct end-to-end processing, clearing and settlement services for cross-border renminbi transactions. The Frankfurt-based operation will act as a bridge between European financial institutions and businesses and China’s onshore payment systems.

The move is expected to make cross-border trade and investment flows more efficient by giving European clients direct access to China’s financial infrastructure, including capital markets and liquidity services. It will also expand access to offshore renminbi liquidity and create more options for companies conducting business with China.

“Securing RMB clearing capability in Europe reinforces our role as a trusted global clearing partner and our long-standing support for RMB internationalisation,” said Alexander von zur Muehlen, Deutsche Bank’s chief executive for Asia Pacific, Europe, the Middle East and Africa and Germany.

The appointment marks a significant step in China’s efforts to expand the international use of its currency and reduce reliance on a global payments system dominated by the US dollar. Beijing has introduced a series of measures this year aimed at increasing the yuan’s role in international trade and investment.

Earlier on Monday, China’s central bank said in its latest five-year plan that it would seek to keep the yuan’s exchange rate broadly stable while expanding the currency’s use in international trade and investment.

The Deutsche Bank mandate follows another push to extend renminbi clearing infrastructure beyond China. In June, China named Standard Bank and Industrial and Commercial Bank of China as joint renminbi clearing banks for Africa, giving them the capacity to clear yuan transactions across 19 African countries.

Renminbi clearing services were already available in Europe, but they had previously been provided through Chinese banks operating on the continent. In Switzerland, for example, China Construction Bank has operated a renminbi clearing hub in Zurich since 2016.

The development represents a new phase in Europe’s long-running competition to establish itself as a centre for renminbi business. Zurich has become an important offshore renminbi hub, while Frankfurt’s position as the home of Deutsche Bank and a major European financial centre gives it a strong platform to expand yuan-related services.

For Deutsche Bank, the appointment also strengthens its role in facilitating China-Europe trade and investment. Leo Yin, president of Deutsche Bank China, said connecting China’s onshore and offshore renminbi ecosystems could help clients pursue opportunities as the currency’s international role evolves.

The mandate could ultimately encourage more European companies to conduct trade and investment in renminbi, while giving China another channel through which to deepen the global reach of its currency.