China’s efforts to make the renminbi widely used globally are bearing fruit.
An increasing number of banks worldwide are using the renminbi, China’s currency, for payments with China and Hong Kong, according to SWIFT.
Last month, 1,081 banks used the RMB to pay transactions with China and Hong Kong, a 22% jump from two years ago. These banks represent 35% of all institutions that pay China and Hong Kong using all currencies, SWIFT said in a statement Thursday.
“Every month we witness new proof of global RMB adoption”, said Michael Moon, head of payments for Asia Pacific at SWIFT.
“The number of banks that use RMB for payments with China and Hong Kong is a key internationalization indicator. This large number also shows that many banks, across the globe, may have an interest in connectivity to the China International Payment System that China will launch by end of the year”.
The Chinese currency is now the fifth most active currency for global payments, with the dollar in the top spot followed by the euro, the sterling and the yen, the statement said. The RMB’s ranking notched up from number seven in January 2014.
HSBC, one of the global banks supporting the internationalization of the RMB, is optimistic that the use of the currency will further rise.
“SWIFT’s data makes it clear that RMB is becoming increasingly central to the business banks do with China and Hong Kong,” said Surendra Rosha, HSBC’s designate head of financial institutions group for Asia-Pacific, in a separate statement.
“As opportunities grow for banks’ clients to use RMB in trade with China and to invest in its markets, we would expect financial institutions’ use of the currency to carry on increasing.”
The Chinese government has adopted several steps to increase of visibility and usage of the RMB in global transactions including opening up more clearing centers overseas and liberalizing its capital market. All of these are part of China’s goal to have the RMB part of the IMF’s currency reserves.
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