The central banks of Germany and China have signed an agreement to facilitate transactions in the Chinese currency in Frankfurt, the Bundesbank said, making Germany's financial capital the first hub for such payments in Europe.

The Bundesbank and the People's Bank of China signed a memorandum of understanding during Chinese President Xi Jinping's state visit to Germany yesterday, ahead of a similar agreement between China and Britain expected on Monday.

"This will make it much easier for the German real economy to clear and settle payments denominated in renminbi, marking a major step forward in intensifying Germany's economic relations with China," Bundesbank board member Carl-Ludwig Thiele said.

The agreement will make it easier for investors and companies in Europe and China to issue and own bonds, shares and funds and to pay bills or list companies in each other's regions.-Reuters