Hanoi, Aug 30 (IANS): Vietnam's central bank has formally allowed the use of Chinese currency -- yuan -- for payment in Vietnam-China border areas to help foster trade between the two countries.

According to the circular issued by the State Bank of Vietnam on Tuesday, individuals and certain kinds of organisations can use yuan for purchasing goods and services starting October 12. The payment can be made via banks or in cash in yuan or in Vietnamese Dong, Xinhua news agency reported.

"The new circular has completed a legal framework for payment in border areas, and has standardized foreign exchange activities in the areas," Can Van Luc, Vietnamese banking and finance expert, senior advisor to the Chairman of the Bank for Industry and Development of Vietnam, said on Thursday.

"The implementation of the new circular will facilitate payment in Vietnam-China border areas, encourage and promote their border trade," he said.

According to Nguyen Thi Mai, a 37-year-old Vietnamese trader in the border area, traders like her have already used yuan for payment with Chinese partners.

"Payment in yuan through banks and in cash in border areas is convenient. So the new circular is good for us because it formalizes the payment," she said.

Vietnam has seven provinces sharing the border with China -- Lang Son, Quang Ninh, Ha Giang, Lai Chau, Lao Cai, Cao Bang and Dien Bien.