The Bangladesh Bank has authorised banks to carry out transactions in Chinese yuan to trade with China amid the rising imports from the second-largest economy.
The central bank sent out a circular entailing the decision to all chief executives of commercial banks on Thursday.
The Authorised Dealers, or ADs, are now permitted to open foreign currency clearing accounts with Bangladesh Bank in CNY.
To widen the scope, ADs may maintain accounts in CNY with their correspondents or branches abroad for settlement of cross-border transactions executed in this currency, it read.
The central bank took the decision following requests from China.
Recently, strong calls were made in support of using alternative foreign currency amid the supply crunch of the US dollar.