Europe represents 10% of Renminbi payments worldwide in value, according to SWIFT’s latest RMB Tracker.
For the past year, four European countries have been settling into the top 10, excluding China and Hong Kong. The United Kingdom leads Europe with 123.6% growth between July 2013 and July 2014, followed by France (+43.5%), Germany (+116%) and Luxembourg (+41.9%).
Since July 2013, European payments directly exchanged with China and Hong Kong in RMB have increased by 105%, showing a considerable upwards trend in RMB usage.
“For most of these European hubs, Greater China still remains the main trading partner in RMB”, says Michael Moon, Head of Payments and RMB, Asia Pacific at SWIFT. “However, there seems to be a noticeable shift in business for some countries like Luxembourg, with an increasing share of truly offshore flows (e.g. no Greater China leg). In the future, we should see a bigger contribution from truly offshore flows in the internationalisation of the Chinese currency."
Over the past year, Chinese authorities and financial institutions announced new partnerships with European countries, making them official clearing centres for the RMB. These announcements have boosted the RMB trading activities in these countries.
"After the United Kingdom and Germany, we may see similar trends happening in France, Luxembourg and even Switzerland," says Moon.
Announced in July, the bilateral currency swap agreement between the People’s Bank of China and the Swiss National Bank could put Switzerland in line to become a new RMB hub in Europe.
Overall, the RMB strengthened its position as the seventh most used global payments currency and accounted for 1.57% of global payments. In July 2014, RMB payments grew in value by 3.0% compared to June 2014.
At a global level, all currencies increased in value by only 2.0% in the same month.