The creation of a Sydney hub to trade China's currency will further open up the world's largest economy to Australian businesses, bankers say.
The Reserve Bank and the People's Bank of China have agreed to establish official renminbi (RMB) clearing arrangements in Australia, allowing more direct trading with Chinese entities.
This will further support the economic and financial links between Australia and China, and strengthen financial cooperation, the RBA said.
ANZ chief executive Mike Smith said the creation of a trading hub was a significant achievement.
"The Renminbi is expected to dominate Asian trade and could become a genuine rival to the US dollar as a global reserve currency," he said.
Westpac will be one of the first local banks to connect with the RMB hub, and its chief executive Gail Kelly said it would create greater opportunities for the bank's customers.
"The ability to settle transactions in RMB in real time through Sydney will make it faster and easier for customers to trade and transact in RMB," she said.
Rob Whitfield, the head of Westpac's institutional bank, also said it would encourage a build of Australian deposits of RMB and stimulate activity in RMB-denominated financial products.
Treasurer Joe Hockey said Chinese authorities would shortly announce the designated clearing bank, which will support Australian importers and exporters in their cross-border RMB transactions.
Meanwhile, Australian-based financial institutions will also be given unprecedented direct investment access to China's previously restricted equity and bond markets.
"Today's announcements will help ensure Australia is prepared to benefit from RMB-related trade and investment opportunities that emerge as China continues to deepen its integration into the global economy," Mr Hockey said.
