Beijing ? U.S. Treasury Secretary Timothy Geithner welcomed China’s announcement Saturday that it will allow a more flexible exchange rate for its currency and urged it to implement the new policy vigorously.

The announcement by China’s central bank suggested a possible break from the yuan’s two-year peg to the U.S. dollar — a source of friction between the two countries — but ruled out any large-scale appreciation.

The People’s Bank of China mentioned no specific policy changes, though markets will be watched closely Monday for the announcement’s effects. Chinese officials have said all along that reforms of the yuan, also known as the renminbi, or “people’s money,” will be gradual.