The People's Bank of China (PBOC) signed a bilateral currency swap agreement on Tuesday with the central bank of Brazil to strengthen economic ties and avert financial risks.

The agreement, [Hong Kong Company Formation, Incorporation, Business Registration] which is expected to alleviate over-reliance on U.S. dollars in bilateral trade, will bring down transaction costs and prevent risks resulting from fluctuations in currency rates for enterprises from both countries.

The amount specified in the agreement is 190 billion yuan (30.29 billion U.S. dollars), or 60 billion Brazilian real, with an effective period of three years.

The move marks the first agreement of its kind within BRICS and is an important step in internalizing the yuan, China's currency.

China has made similar agreements with more than 20 countries, including the Republic of Korea, Malaysia and New Zealand, with total capital amounting to over 1 trillion yuan.

The following is a list of similar agreements and measures passed since 2008:

-- The PBOC and the Bank of Korea announced the establishment of a bilateral currency swap arrangement for up to 180 billion yuan, or 38 trillion South Korean won, in December 2008. The agreement was followed later in the year by a currency swap pact between the PBOC and the Monetary Authority of Hong Kong.

-- [Hong Kong Company Formation|Hong Kong Company Registration]The PBOC launched an 80-billion-yuan (40 billion Malaysian ringgit) currency swap arrangement with Malaysia in February 2009 to promote bilateral trade, as well as inked a similar agreement with Bank Indonesia in March to provide short-term liquidity for the stabilization of financial markets.

-- The State Council, or China's cabinet, in April 2009 announced a pilot program to allow exporters and importers in selected Chinese mainland cities to settle cross-border trade deals in yuan with economic entities in Hong Kong, Macao and regional trade partners, such as the Association of Southeast Asian Nations (ASEAN).

-- In June 2010, China expanded the pilot program to most of the country, as well as allowed it to cover trade with any country.

-- In 2010, a bilateral currency swap arrangement was launched by China's central bank and the financial authorities of Singapore with an amount totaling 150 billion yuan, or 30 billion Singapore dollars.

-- The PBOC and the Reserve Bank of New Zealand announced a currency swap arrangement with an effective period of three years in April 2011.

-- In June 2011, the PBOC signed a bilateral local currency settlement agreement with the Central Bank of the Russian Federation under which economic entities from both countries are able to conduct settlements and payments using either yuan or rubles.

-- In 2012, the PBOC signed bilateral local currency swap agreements with the Reserve Bank of Australia and the National Bank of the Ukraine, respectively, for the purpose of promoting bilateral financial cooperation.

-- Efforts to globalize the yuan have [Hong Kong Company Registration Guide]also been made by Hong Kong and Singapore, which are both offshore yuan centers, offsetting the fact that the yuan is not a fully convertible currency. London and Luxembourg are looking at the possibility of becoming offshore yuan hubs.