From June 1st 2012, China and Japan set up financial markets that allow banks to directly exchange yuan and yen. The move shows an immense strategic importance. It will provide convenience to Sino-Japanese trades, decrease dependence of the two currencies on US dollars, bring the yuan one step closer to become global currency, and symbol that the financial cooperation of the two countries entered into a new level. However, after several months, the direct exchange exhibits a characteristic of small scale and limited impact on the economy of the two countries. This is due to, among other factors, the high exchange cost, small number of involved financial institutions, the low trading demand of the firms and the non-free convertibility of Yuan. To enlarge the scale of direct exchange between yuan and yen, China and Japan both need to solve many difficulties. There is still a long way to go. <<