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International adoption of Renminbi gains momentum

Strong cross-border trade, RCEP trade pact, and deep capital market integration support international use of RMB

January 27, 2023 | Hugh Zeng
  • Cross-border trade strongly supports settlement in RMB
  • ASEAN and RCEP continue to foster use
  • Increase in RMB denominated bond and stock market signals confidence in Chinese economy 

The past year saw a strong momentum in the international adoption of Renminbi (RMB) as its share as a reserve currency continued to increase. Claims in RMB rose to a five-year high of $336.1 billion (RMB 2.2 trillion) in the fourth quarter of 2021, accounting for 2.8% of the composition of world reserve currencies, the highest since RMB’s inclusion in special drawing rights (SDR) in 2016. In the latest review of the SDR, the International Monetary Fund (IMF) increased RMB’s weight to 12.3% from 10.9%.

Offshore RMB deposits continued to grow in 2021. Hong Kong still has the largest offshore RMB deposit, according to data from the Hong Kong Monetary Authority (HKMA). At the end of 2021, the scale of offshore RMB deposits in Hong Kong reached RMB 927 billion ($145.39 billion), an increase of 28.4% from the end of 2020. The UK market had the highest growth rate of offshore RMB deposits in 2021 with RMB 84 billion ($12.9 billion), a 35.5% increase, followed by Singapore with RMB 175 billion ($26.9 billion), growing 30.6%.

Data from Swift shows that while the RMB has remained at the fifth spot among major international payment currencies since March 2020, its share in global payments was 2.2% as of March 2022, 0.35 percentage points higher than it was two years ago. From December 2021 to January 2022, the proportion of RMB in global payments was at one point up to 3.2%, surpassing the Japanese Yen, reaching fourth place in the world.

In 2022, China Construction Bank (CCB) in partnership with The Asian Banker launched an annual survey to assess international usage of the RMB. The sur...

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Keywords:RMB, Cross-border, Fiat Money, ASEAN, Forex, Payments