Offshore RMB growing: SWIFT

SWIFT’s latest thinking out loud on the internationalisation of China’s currency shows that when it comes to handling global payments in Chinese renminbi (RMB), Hong Kong still takes the lion’s share with over 70 percent of the market by value. However, over the last two years, an additional set of countries have given chase, gradually increasing their share to 25 percent in February 2015 compared to 17 percent in February 2013.

Singapore and London played a key role in driving RMB adoption outside of Hong Kong, notes SWIFT. In the last few months, there has also been acceleration in RMB usage with the emergence of other offshore RMB clearing centres worldwide, including several countries outside of Asia-Pacific. These additional clearing centres include Bangkok, Doha, Frankfurt, Kuala Lumpur, Luxembourg, Paris, Seoul, Toronto and more recently Sydney. They represent the largest share of offshore countries, excluding Hong Kong, using RMB for payments.

“The use of RMB by more countries, beyond Hong Kong, is a good testimony of the internationalisation of the Chinese currency”, says Michael Moon, head of payments Asia-Pacific at SWIFT. “The global volume of payments in RMB will fluctuate, and is actually down by value compared to last month, but the broader support by more countries beyond Hong Kong, underlining its international use, suggests the potential for future clearing centres and further development of the currency”.

In February 2015, the RMB fell back to number seven in the world payments currency league with a share of 1.81 percent. This represents a decrease of 20.4 percent compared to last month, which is likely due to the seasonal effect of the Chinese New Year. Payments across all currencies decreased in value by 9.3 percent in that same period. The overall negative trend may be due to February being a shorter month.