Standard Chartered has launched the Renminbi Globalisation Index (RGI), an industry benchmark that effectively tracks the progress of renminbi (RMB)-based business activity worldwide. Scheduled for release on a monthly basis, the index offers corporates and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving the adoption of the RMB as an international reserve currency.
To complement the index, Standard Chartered announced the results of its first quarterly ‘Offshore RMB Corporate Survey’, wherein companies across Asia and Europe shared their motivations and expressed a strong appetite for using RMB offshore in the next six months. Going forward, the survey will provide a qualitative indicator to forecast the direction of the market.
The index covers three markets which dominate the offshore RMB business: Hong Kong, London and Singapore. It measures business growth in four key areas:
- Deposits (denoting store of wealth).
- Dim sum bonds and certificate of deposits (as vehicles for capital raising).
- Trade settlement and other international payments (unit of international commerce).
- Foreign exchange (FX) (unit of exchange).
As RMB internationalises, there is capacity to include additional parameters and markets, aligning the index with future development.
The index works by sourcing data from several industry and official sources and leading providers of market data.
The index is based from December 2010, the point from which sufficient meaningful information became available to produce a reliable measure. The RGI shows that between December 2010 and September 2012 the internationalisation of the RMB saw a seven-fold increase. All four parameters and the emergence of new markets contributed to the impressive growth, with trade-settlement and other international payments being the key driving force behind the increase.
“We are delighted to continuously lead the market in the RMB space. Today’s launch for the first time offers market participants access to a global offshore RMB benchmark that provides insights into the developments in three of the largest offshore markets covering the main product sets,” said Karen Fawcett, Standard Chartered’s group head of transaction banking, who also sits on Standard Chartered’s RMB steering committee. “Our conversations with clients reveal their keen interest of how the currency is gaining traction and to better understand how to leverage key trends for further business development. This index will provide a critical view of the currency’s acceptance and offer clients various factors to consider while managing the RMB within their basket of working capital currencies.”
The index shows that Hong Kong dominates the offshore RMB business, with a four-fifth share, while Singapore and London are emerging as the upcoming centres, each taking up a tenth of the market. Taipei and New York are expected to join this club in the coming years.
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