Direct trading between renminbi and euro currencies began in China's inter-bank market on September 30.  

China Foreign Exchange Trade System (CFETS), a unit of the central bank, said a market based approach will help improve the formation of a direct exchange rate. Until now, the currencies had to be exchanged through the US dollar.

“Direct trading will help lower currency conversion cost for economic entities, facilitate the use of the renminbi and euro in bilateral trade and investment, promote the financial cooperation and enhance economic and financial ties between China and Eurozone member states," said the People's Bank of China in a statement.

General growth in RMB usage

Bilateral trade between China and the EU has grown to nearly US$500 billion and the share of it settled in renminbi is expected to triple to 5%-6% of China's global trade within the next three years. The appointment of several new renminbi clearing banks in major European financial centres, including London (where the CCB branch offers clearing services), Frankfurt (Bank of China), Paris (Bank of China) and Luxembourg (ICBC).

The euro direct trading is expected to accelerate the usage of RMB in the euro/RMB trading corridor. Deutsche Bank expect that renminbi cross-border trade settlement will increase by roughly 50% in 2014 to 6 trillion yuan, accounting for approximately 20% of China's global trade volume.