Despite the growing importance of China in the global economy and the various strategic measures put in place to support its currency, RMB usage accounted for 1.61% of domestic and cross-border payments in December 2017, said SWIFT recently.
Hong Kong remains the largest RMB clearing center with 76% activity share, while London remains the largest clearing center outside of greater China but its share of global RMB clearing activity decreased from 6.51% in 2016 to 5.59% in 2017, the financial messaging services provider added.
In addition, the prominent role of the CNY/USD pair remained unchanged: 97.08% of RMB trading by value is against the USD and there is no substantial liquidity in any other RMB pair, according to company.
“The RMB has had a difficult year in 2017 and struggled to realize its potential for growth,” said Michael Moon, Head of payments Markets, APAC at SWIFT. “Experts suggest that capital controls and uncertainties over future regulations mean that a significant reversal of the decline in RMB usage for trade and payments is unlikely in 2018.
There is hope for the currency though, he pointed out, adding that RMB gains pace on digital platforms.
“Mobile services that expanded usage of the RMB, such as Alipay and WeChat Pay, as well as international initiatives such as SWIFT gpi, continued to grow rapidly throughout the year,” he observed. “Twenty-two Chinese banks have now adopted gpi, helping make RMB payments faster, more transparent and traceable.”
SWIFT gpi (global payment innovation) is a cross-border payment standard that allows faster, more transparent business-to-business payments, said SWIFT.
The company identifies three major trends that might help make RMB internationalized in 2018. They include:
- the emergence of a cashless society mainly driven by digital giants Alipay and WeChat Pay
- expanded trade links between Asia, Africa and Europe through China’s Belt and Road Initiative
- continued globalization of Chinese banks and their adoption of the SWIFT gpi service