GENEVA (AFP) ― The Swiss and Chinese central banks signed a currency swap agreement in Beijing on Monday, marking an important step in the development of a market for yuan in Switzerland, the Swiss central bank BNS said.

The agreement, highlighting steps towards international use of the yuan, ensures that Swiss francs will be available in China and that yuan, also known as renminbi, will be supplied to financial centers in Switzerland.

The BNS statement said that the agreement was “an important step” for the renminbi business in Switzerland.

The agreement permits the two central banks to buy up to a maximum of 150 billion yuan or 21 billion Swiss francs ($23.4 billion).

The deal was signed by the governor of the People’s Bank of China Zhou Xiaochuan and BNS president Thomas Jordan.

The BNS also obtained a quota of investment in yuan which opens the way for it to invest part of its currency reserves on the Chinese bond market.

Under this arrangement, the Chinese central bank allows BNS a quota of 15 billion yuan or about 2 billion Swiss francs to invest on the Chinese interbank bond market.

In a separate statement, the Swiss finance ministry welcomed the agreement with China, saying it showed that Switzerland was playing an increased role in the internationalization of the Chinese currency.

A free trade agreement between China and Switzerland took effect on July 1.

It is the first agreement of its type between China and a European country.

China is the sixth-biggest export market for Switzerland, and the fourth supplier to it.

Switzerland hopes that with this agreement it can get ahead of other European countries, acting as a bridgehead into Europe for Chinese trade and companies, and also as a center for finance in yuan.

Switzerland is not a member of the European Union but has close trading relations with it.

The Swiss finance industry is also restructuring its activities to compensate for constraints arising from new international agreements, and from U.S. action clamping down on cash outflows into foreign banks.