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China – Renminbi Becomes One Of World’s Top Five Payment Currencies, Says Study.

3 February, 2015

 

Legal News & Analysis – Asia Pacific – China – Banking & Finance

 

China’s renminbi (CNY) has become one of the top five world payment currencies in terms of value since November 2014, overtaking both the Canadian dollar and the Australian dollar, according to figures compiled by the Society for Worldwide Interbank Financial Telecommunication (Swift).

 

Swift’s data said the rise in ranking for the currency followed nearly one year when it was “firmly positioned in seventh place”.

 

Just two years ago, in January 2013, the CNY was ranked at 13 with a share of 0.63%, Swift said. In December 2014, the currency “reached a record high share of 2.17% in global payments by value and now trails the Japanese yen, which has a share of 2.69%”.

 

Swift’s head of banking markets Wim Raymaekers said: “The CNY breaking into the top five world payments currencies is an important milestone… and confirms its transition from an ‘emerging’ to a ‘business as usual’ payment currency.”

 

Raymaekers said: “The rise of various offshore CNY clearing centres around the world, including eight new agreements signed with the People’s Bank of China in 2014, was an important driver fuelling this growth.”

 

According to Swift, overall CNY payments globally increased in value by 20.3% in December 2014, while the growth for payments across all currencies was 14.9%. The CNY “has been showing a consistent three-digit growth over the past two years with an increase in value of payments by +321%”, Swift said. “Over the last year, CNY payments grew in value by 102% compared to an overall yearly growth for all currencies of 4.4%.”

 

A survey published by Swift in 2014 indicated that the CNY was the second most used currency for cross-border payments with China and Hong Kong, and its use is expected to spread to other major international financial centres.

 

Executive board member of the European Central Bank Benoit Coeure said last November that the setting up of CNY clearing arrangements in Europe and worldwide “will play an important role in facilitating cross-border payments, as well as closer integration and relations between economies”.

 

“Looking forward, the renminbi clearly has the potential to become a major international currency and to be included, when the International Monetary Fund will deem it appropriate, in the basket of currencies that determines the value of the Special Drawing Rights,” Coeure said.

 

Pinsent Masons

 

For further information, please contact:

 

John Salmon, Partner, Pinsent Masons

john.salmon@pinsentmasons.com

 

Jason Collins, Partner, Pinsent Masons

jason.collins@pinsentmasons.com

 

Homegrown Banking & Finance Law Firms in China 

 

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