Cross-border yuan settlement growing rapidly

yuan

Currency now second most used for China’s intlpayments after dollar, central bank official says

The use of the yuan in cross-border trade and investment has grown rapidly in the past five years, according to Hu Xiaolian, deputy governor of the People’s Bank of China.

Addressing a recent forum on cross-border yuan business in Beijing, Hu revealed international renminbi settlement had exceeded 4.8 trillion yuan ($784 billion) by the end of September this year, up from 3.58 billion yuan in 2009.

Hu said yuan payments between China and 174 countries now account for nearly one quarter of China’s total international payments, which has helped the Chinese currency become the second most used for such payments after the US dollar. More than 15 percent of imports and exports were also settled in yuan.

According to statistics released on Tuesday by the Industrial and Commercial Bank of China Ltd, the nation’s biggest lender by assets, its own cross-border yuan business has grown by an average of more than 200 percent annually since China launched its pilot program to settle more cross-border trade in yuan in 2009.

As of Sept 30, total cross-border yuan business handled by the bank amounted to nearly 7.7 trillion yuan, 2.8 trillion yuan of which was handled in the first three quarters of 2014, an increase of more than 80 percent from a year earlier.

Hu said China has been deepening international cooperation on the use of yuan in recent years, and that the PBOC had now signed bilateral currency swap agreements worth almost 2.9 trillion yuan with 26 central banks and monetary authorities.

Those agreements include the PBOC setting up clearing houses for yuan-denominated transactions in leading financial centers around the world, such as Hong Kong, Singapore, London and Frankfurt.

After designating the Singapore branch of ICBC as the renminbi-clearing bank there in February, 2013, the branch had set up 82 yuan clearing accounts covering 34 countries and regions by the end of September this year.

Its clearing business amounted to 23.8 trillion yuan.

The renminbi is now directly tradeable with the US dollar, the euro, yen, pound, Russian rouble, Malaysian ringgit, Australian dollar and New Zealand dollar.

Some central banks have added it as a reserve currency or have signaled they are prepared to do so.

Hu said China is forging ahead with a reform of the yuan exchange rate mechanism, which will allow market players to better allocate their financial resources based on price signals.

The PBOC widened the daily trading band for the yuan against the US dollar to 2 percent from 1 percent in March. As two-way fluctuations in the yuan exchange rate expand steadily, traders have begun to have divided expectations on the rate. Such reform has helped to lay a market foundation for the cross-border use of the yuan, Hu said.

In her view, China should continue to improve the financial regulatory coordination mechanism and further promote cross-sector, cross-border regulatory cooperation.

 

 

 

Source : China Daily | October 23, 2014

Thomas D’Innocenzi

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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