International Renminbi Payments Between Offshore Centres at Record Level

International renminbi (RMB) payments between ‘true offshore’ trading centres (excluding China and Hong Kong) have grown by +837% in value over the past two years – compared to an overall growth of +378% – reaching a share of 3.25% in September 2014 according to the latest RMB Tracker issued by SWIFT.

True offshore international RMB payments are transactions taking place between RMB centres (for example Singapore, the UK and Luxembourg) without involving China and Hong Kong.

The financial messaging services provider said that based on the RMB Tracker, clearing centres such as Singapore, the UK and the newly appointed German centre are driving true offshore use of the RMB. Other countries, such as Belgium that are not normally part of the RMB top ten, are also fuelling this offshore trend.

Belgium currently sits fourth for true offshore RMB international payments. Over the last nine months, SWIFT has noted a significant increase in all RMB offshore centres with Singapore holding its leading position at +574% growth, followed by Luxembourg (+517%) and the UK (+236%).

“Payments, FX and trade finance are the markers to watch for growth in RMB internationalisation,” says Alex Medana, director, securities markets, Asia Pacific, SWIFT. “The RMB is primarily used as a trade settlement currency, but it is worth noting that the RMB is steadily making progress as an investment currency. In the first nine months of 2014, 28% of securities settlement confirmations in RMB were done outside China and Hong Kong, compared to 16% during the same period two years ago.”

Overall, the RMB strengthened its position as the seventh-ranked global payments currency and accounted for 1.72% of global payments, an all-time record share. In September 2014, the value of RMB global payments increased by 13.2%, well above the average 8.1% growth for all currencies.
Vina Cheung, HSBC’s global head of RMB internationalisation, payments and cash management, described the latest figures as “encouraging”.

“At HSBC we’re seeing companies seize the opportunities presented by China’s currency liberalisation to deepen business relationships in the world’s second largest economy. As China becomes ever more important to international businesses, the internationalisation of the RMB is creating new opportunities in trade, investment, cash management and funding.

“HSBC forecasts that a third of China’s trade will be settled in RMB by 2015 and that the currency will be fully convertible by 2017. SWIFT’s findings show that initiatives like the establishment of offshore hubs are supporting greater adoption of the Chinese currency to deliver financial and relationship advantages from using RMB.”

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