* China researching how to let individuals settle trade in yuan
* Considering how to enable settlement for travel, e-commerce
* Will open new channel for yuan to flow into global markets
* Programme to be implemented by end of year
By Xiaowen Bi and Pete Sweeney
HONG KONG/SHANGHAI, May 6 (Reuters) - China is looking into how individuals and small businesses can settle trade using yuan this year, a People's Bank of China official told Reuters on Monday, potentially opening a massive new conduit for Chinese currency to flow into global markets.
At the same time, by allowing individual traders and companies, Beijing can help eliminate the risk of currency fluctuation for individuals and small enterprises in the import/export sector.
Guo Jianwei, deputy director of one of two central bank departments focused on monetary policy, said that regulators were considering how to include provisions for travel, online commerce and trade by small businesses.
"After several years of operation, yuan trade settlement by corporations has matured; the next step is trade settlement for individuals," said Guo.
"A pilot programme in Yiwu is already under way, and the next step is to expand it throughout the whole country."
Yiwu is a small city in Zhejiang province that hosts a trade expo centre that has become a massive platform for small private businesses selling Chinese manufactures for export.
Guo's more detailed explanation of the programme to Reuters followed similar comments he made at a conference in Guangzhou on Sunday.
The official China Securities Journal had previously quoted a central bank spokesperson saying that Yiwu would be an area of financial reform, including the removal of restrictions on currency conversions, yuan trade settlement and an easing of other related trade policies.
Chinese individuals are only permitted to exchange the equivalent of $50,000 per year for use in overseas purchases or investments, but many companies have managed to get around these restrictions through trade.
Editing by Jacqueline Wong