HSBC has implemented an RMB cross-border payments and collections service for a Fortune 500 company in China.
The new service provides a centralised approach to cash management by enabling the Chinese subsidiaries of the developer of power and automation technologies to use RMB to settle cross-border payments and collections with their parent company's overseas treasury centre.
The tailor-made 'gross-in/gross-out' model designed by HSBC not only eliminates foreign exchange exposure and optimises liquidity management for the company, but it sets a precedent for other multinational companies that will ultimately help boost circulation of the RMB outside mainland China.
"The growing need for cross-border RMB cash management solutions reflects the increasing importance of the Chinese currency in the global payments system," says Kee Joo Wong, HSBC's Head of Global Payments and Cash Management in China. "HSBC has implemented an RMB cross-border settlement model for our client that other multinationals can also benefit from."
Use of the RMB for global trade and payments has soared since Chinese authorities began to liberalise the rules governing the currency in 2009. Some 10.5 per cent of China's total merchandise trade was settled in RMB last year, and HSBC forecasts that share will rise to 30 per cent by 2015.
The RMB was the 13th most used currency for global payments in January, according to SWIFT data, climbing from 20th place in January 2012 after overtaking currencies including the Russian Rouble and Danish Krone.