Australia's top finance and government officials joined the Bank of China (BOC) president in Sydney on Monday to officially announce the appointment of BOC's Sydney branch as the clearing bank for the local yuan market in Australia.

BOC President Chen Siqing said the development of a yuan market would help cut the cost of currency trade between China and Australia.

"The launch of the bank in Sydney represents an important step in the internationalization of the yuan," Chen said.

Reserve Bank of Australia (RBA) Governor Glenn Stevens said the ceremony on Monday marked an important step in the further development of a local yuan market.

The key direct benefit of the official Australian yuan clearing bank is that it can more efficiently facilitate transactions between Australian firms and their Chinese mainland counterparts using the Chinese currency, he said.

BOC's attempt to step up its presence in the market comes after regulators and banks have for several years sought to remove barriers to direct currency conversion between Australian dollars and the yuan.

New South Wales Premier Mike Baird said only 1 percent of trade with China was settled in yuan, and there is scope for this to rise significantly.

Stevens said the process of yuan internationalization and the associated opening of China's capital account are likely to have significant implications for the global financial system.

The RBA chief also noted that opportunities for Chinese and Australian investors to invest in each other's financial markets could "grow significantly in the coming years."

"By increasing their familiarity with the yuan as an international transaction currency, local financial institutions, investors and firms are likely to be better placed to take advantage of these future opportunities as they arise," he said.