Data from SWIFT’s RMB Tracker shows that despite continued growth globally, the Canadian dollar has overtaken the RMB with a 1.96% share of world payments currencies, leaving the RMB at position number six with a 1.72% share in June.
The data marks a gradual, but expected, slowdown for the currency in 2016 as it continues on its path to internationalization. In spite of this trend, and as of June 2016, more than 1,800 financial institutions worldwide are using the RMB for payments (with or without China and Hong Kong), representing a 12% increase compared to the same month last year.
With the occasion of the SWIFT Greater China Regional Conference taking place in Shanghai on the 21 July 2016, a special edition of The RMB Tracker has been published. This report focuses on 2016 half-year statistics and analysis from SWIFT, as well as insights from financial industry experts on the recent evolutions of the RMB and what the future has in store for the Chinese currency.
Data within the report shows that in the first half of 2016, the Japanese Yen edged past the RMB to become the most active currency within APAC for payments with China and Hong Kong, with a 32.8% share (RMB at 31.2%). New offshore centres have emerged including Seoul and Canada, and the United Kingdom has regained its status as the number one clearing centre after Hong Kong, processing 24.4% of RMB payments, excluding China and Hong Kong.
“As RMB growth is linked to China’s economic activity, data suggests that the volatility in the Chinese market and the slowdown of the Chinese economy are likely factors that have impacted offshore RMB usage this past year,” said Alain Raes, Chief Executive, Asia Pacific & EMEA at SWIFT.
“On a positive note, key initiatives, such as the progress of China’s new Cross border Inter-Bank Payments System (CIPS) and the opening of new offshore clearing centres, sets a solid foundation for future growth.”
Raes noted that these initiatives, when combined with industry efforts to expand the RMB’s reach, enhance products and services and focus more on standards and compliance, sets the RMB on a clear path towards internationalization.
To complement the Chinese market’s efforts to broadly connect its currency to offshore markets, China International Payment Service Corp., (CIPS Co.) signed a Memorandum of Understanding (MOU) with SWIFT in March for cross-border interbank payment system cooperation.
The MOU sets out plans for a strategic collaboration to develop the Chinese payments platform using SWIFT as a channel to connect CIPS with SWIFT’s global user community. Access to the SWIFT user community provides CIPS with a platform to capture cross-border RMB flows to all types of participants, significantly extending the reach of the currency.