China has named Deutsche Bank as a renminbi clearing bank for Europe, making the Germany-based financial institution the first on the continent to be designated as a non-Chinese lender.

The People’s Bank of China announced this on Monday, saying the decision followed a memorandum of understanding between the central bank and Deutsche Bank.

The designation allows Deutsche Bank, headquartered in Frankfurt, to handle direct yuan transactions between Europe and China, according to the bank’s statement on Monday.

“Deutsche Bank will facilitate direct end-to-end processing, clearing and settlement services for cross-border RMB transactions for European financial institutions and businesses, acting as a local bridge to China’s payment systems,” it said.

Before the designation, units of Bank of China, Industrial & Commercial Bank of China and China Construction Bank in London, Frankfurt, Paris, Budapest and Luxembourg managed cross-border transactions using China’s official currency.

Alexander von zur Muehlen, CEO of Asia Pacific, Europe, Middle East and Africa and Germany, lauded the decision, saying it would strengthen financial connectivity between European institutions and businesses and China.

“It strengthens China-Europe financial connectivity and enhances our ability to support clients’ cross-border trade and investment flows with greater choice and flexibility,” said Mr Muehlen.

China’s decision to designate Deutsche Bank, the world’s largest euro clearing bank, follows its announcement in June to broaden efforts to promote the global use of the yuan and reduce dependence on the U.S. dollar for international trade and other transactions.

Days after the announcement, it named Standard Bank and Industrial and Commercial Bank of China as the Renminbi clearing banks for Africa to handle transactions in 19 countries.

On Monday, the central bank announced a five-year plan to expand the use of the yuan in global markets.