The latest renminbi (RMB) Tracker figures from SWIFT show the Chinese currency crossing a number of significant milestones.
There are now 101 countries using RMB for payments and the fact that seven new countries – Bolivia, Colombia, Mozambique, Namibia, Kuwait, Georgia and Spain – have “crossed the river” and use it for more than 10% of their direct payments with China and Hong Kong, in comparison with other currencies, reflects the currency’s rising importance in global trade.
The 10% milestone is known as ‘crossing the river’.
According to Vina Cheung, global head of RMB internationalisation at HSBC Asia-Pacific’s liquidity and cash management unit: “More and more countries are ‘crossing the river’ and making use of the renminbi for a meaningful share of their payments.”
“The latest SWIFT data shows the Chinese currency continuing to gain critical mass in global payments. Its inclusion in the International Monetary Fund’s (IMF) Special Drawing Right basket earlier this month confirms the renminbi’s emergence as a global currency,” she added. “This will be another catalyst for its growing use in trade and investment with China.”
Overall, the RMB kept its position as the fifth most active currency for global payments by value, with an increased share of 2.03% from 1.86% the previous month, according to SWIFT’s latest September RMB Tracker figures. The metric measures RMB usage around the world in global trade versus other currencies, as an indication of China’s rising status in the global economy.
In September 2016, the worth of RMB global payments value increased by 10.02% compared to August 2016, which is higher than the average growth of 0.93% for all currencies.
“Over the last two years, we have witnessed a continued increase in RMB usage for direct payments with China and Hong Kong, with most of the growth coming from early adopters and main RMB clearing centres such as Singapore, UK and South Korea,” said Astrid Thorsen, head of business intelligence solutions at SWIFT. “On the other hand, two of the largest economies in the world and important trade partners with China – the US and Japan – still show low RMB adoption. The latest announcement related to the appointment of the first RMB clearing centre in the US should positively impact the country’s RMB usage.”
The Chinese central bank last month appointed Bank of China Ltd’s New York branch as the first RMB clearing institution in the US. The appointment was made in conjunction with the US Federal Reserve and means the currency now effectively has ‘follow the sun’ 24-hour global coverage capabilities.
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