HSBC Implements RMB Cross-border Payments and Collections Solution in China

HSBC has implemented a renminbi (RMB) cross-border payments and collections solution for a Fortune 500 company in China. The bank said solution provides a centralised approach to cash management by enabling Chinese subsidiaries of the major power and automation technologies group to use RMB to settle cross-border payments and collections with their parent company’s overseas treasury centre.

According to HSBC, the tailor-made ‘gross-in/gross-out’ model not only eliminates foreign exchange (FX) exposure and optimises liquidity management for the company, but it sets a precedent for other multinational companies (MNCs) that will ultimately help boost circulation of the RMB outside mainland China.

“The growing need for innovative cross-border RMB cash management solutions reflects the increasing importance of the Chinese currency in the global payments system,” said Kee Joo Wong, HSBC’s head of global payments and cash management in China. “HSBC has implemented an innovative RMB cross-border settlement model for our client that other MNCs can also benefit from.”

Use of the RMB for global trade and payments has soared since Chinese authorities began to liberalise the rules governing the currency in 2009. Some 10.5% of China’s total merchandise trade was settled in RMB last year, and HSBC forecasts that share will rise to 30% by 2015.

The RMB was the 13th most used currency for global payments in January, according to SWIFT data, climbing from 20th place in January 2012 after overtaking currencies including the Russian rouble (RUB) and Danish krone (DKK).

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