A RMB clearing bank in the Philippines was launched in a ceremony held in capital city Manila on Saturday.

Chinese State Councilor and Foreign Minister Wang Yi, Philippine Foreign Secretary Teodoro Locsin, Chinese Ambassador Huang Xilian and Philippine Central Bank Governor Benjamin Diokno were among those present at the ceremony.

The Bank of China Manila has been established as the country's RMB Clearing Bank to support the growing local RMB market. The initial memorandum of understanding was signed by the People's Bank of China (PBOC) and the Bangko Sentral ng Pilipinas in 2018.

The Bank of China Manila can process the settlement of accounts and other core RMB services, such as remittance, foreign exchange, liquidity support and banknotes for local participating banks.

It can also provide local market participants with access to Chinese yuan (CNY) rate as an alternative to the China Offshore Spot (CNH) rate.

CNY is an onshore RMB currency traded within the Chinese mainland or internationally through clearing banks appointed by the PBOC, while CNH is an offshore RMB currency traded outside the Chinese mainland.

By making it easier to trade with counterparties in the Chinese mainland, Bank of China Manila can help improve the economic and trade partnership to promote development between the Philippines and China, the bank said in a notice.

The Chinese currency yuan was one of the most attractive currencies among major economies worldwide in 2020, supported by domestic economic conditions and a weak dollar.

China's central bank will keep the yuan basically stable at a reasonable level in 2021, said Sun Guofeng, head of monetary policy at the PBOC, on Friday.

He also said two-way fluctuations in yuan will become normal going forward.

Read more: Solid fundamentals for Chinese yuan likely to be extended into 2021