It won't be long before the Chinese yuan, or renminbi, becomes Asia's regional currency, what with the number of trade transactions using China's currency as preferred mode of financial settlement.

To augur this development, the Asian Development Bank (ADB) on Thursday has decided to include the yuan, along with India's rupee, into its Trade Finance Program (TFP).

With the yuan "being increasingly used to settle trade transactions... over time it could become an anchor currency, helping the region to integrate their economies, cooperate on monetary and finance issues as well as gradually open up the (Chinese) financial market," the ADB said in a statement issued in Singapore, coinciding with the launch of its latest report, the Asian Economic Integration Monitor.

On Thursday, the ABD announced the approval of including the yuan as well as the rupee into the TFP. The latter is an instrument that bridges market gaps for trade finance by providing guarantees and loans to banks to support trade. Previously used to cover transactions denominated in US dollars, yen and euros, the TFP has supported over US$10.6 billion in trade since 2009.

According to the ADB, the number of countries engaging in bilateral trade with Chinan and settling their transactions in renminbi, has been increasing. Some of the nations settling their international trade in yuan include Hong Kong, Singapore and London.

The Singapore Exchange this month had also announced it is ready to quote, trade, clear and settle securities denominated in yuan, the ADB report further added.

In the next 10 years, Asian intra-regional trade will account for half of all foreign trade for Asian countries. Although 90 per cent of all foreign trade in Asia is settled in US dollars at present, this percentage will definitely decline.

"All in all, it makes sense that some of the players -- exporters and importers -- start to accept the use of alternative currency, and since China is the biggest player in the field, they accept the use of the yuan for trade settlement," Iwan Azis, head of ADB's Office of Regional Economic Integration, told reporters during the launch.

China has 20 bilateral local currency swap arrangements with countries in and outside Asia, totalling $157 billion, ADB said.