The central banks of China and Switzerland have struck a bilateral currency swap agreement, a move that advances the international use of the renminbi and boosts Switzerland’s hopes of becoming a trading hub for the Chinese currency.

Under the terms of the deal, signed in Beijing on Monday by Zhou Xiaochuan, governor of the People’s Bank of China, and Thomas Jordan, chairman of the Swiss National Bank, renminbi and Swiss francs can be purchased and repurchased between the two central banks, up to a limit of Rmb150bn or SFr21bn.

The deal comes amid fierce competition among western financial centres for renminbi business. Earlier this year, the PBoC struck deals with the Bundesbank in Frankfurt and the Bank of England in London which will make it easier for business to be settled in the Chinese currency in both centres.