The Chinese renminbi (RMB) remained the fifth most active currency for global payments by value in February 2016 with a share of 1.76%, reports SWIFT.
This represents a decrease of 27.5% compared to January, while payments across all currencies decreased in value by 1.3% during the same period. However, the financial messaging services provider says the setback is temporary.
By contrast, SWIFT’s data shows a double digit growth of RMB adoption by financial institutions established in all regions.
In February 2016, 1,131 banks were using the RMB for payments with China and Hong Kong, representing 37% of all institutions exchanging payments with the two locations across all currencies. This is an 18% increase over the last two years.
The majority of these institutions are located in Asia-Pacific (557), followed by Europe (376), the Americas (124) and then Africa and Middle East (74). Compared to February 2014, the strongest growth was seen in the Americas (+31%), followed by Asia-Pacific (+18%), Europe (+17%) and Africa/Middle East (+12%).
The SWIFT data also indicates that 24% of the offshore RMB payments done with China and Hong Kong are handled by Chinese banks with a global footprint, meaning Chinese banks that have offshore branches and/or subsidiaries.
“The global volume of payments in RMB fluctuates, and is actually down by value compared to last month, likely influenced by the seasonal effect of the Chinese New Year,” said Michael Moon, Head of Payments, Asia-Pacific at SWIFT.
“Furthermore, as widely reported in the press, the number of days it takes to settle payments in RMB has grown to the highest level in many years. The adoption of the currency by more financial institutions, within Asia-Pacific and abroad, will however further increase the global utility of the RMB for payments and, over time, will drive continued internationalisation of the Chinese currency.”
Commenting on SWIFT’s latest RMB Tracker, Vina Cheung, global head of RMB internationalisation, global payments and cash management, Asia-Pacific for HSBC said: “With almost 40% of international financial institutions facilitating RMB payments, it is clear that the Chinese currency is growing in its role as a global trade, investment, and reserve currency.
“The growth of payments inter-connectivity between Asia, the US and Europe demonstrates the clear value in having a global banking reach that enables clients at both ends of the world’s largest trade corridors to connect and transact in RMB.”
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