The rise of the renminbi (RMB) continues to reshape the global financial landscape, marking significant strides in China's quest for international monetary influence.
On October 27, the Industrial and Commercial Bank of China (ICBC) celebrated a pivotal moment by launching an RMB clearing bank in Pakistan. This development facilitates the clearance and settlement of cross-border transactions and supports various yuan-related activities, including buying, selling, borrowing, and lending for participating banks in Pakistan.
Concurrently, the People’s Bank of China (PBOC) released its 2023 Yuan Internationalization Report, highlighting the yuan's robust progress towards global recognition. Since 2022, there has been a strategic expansion of yuan clearing banks in countries like Laos, Kazakhstan, Pakistan, and Brazil, enhancing the yuan's overseas clearing network in line with evolving international finance dynamics.
In the first nine months of 2023, yuan cross-border payments reached an impressive 38.9 trillion yuan ($5.32 trillion), a 24 percent increase from the previous year. Notably, yuan-based transactions now account for 24.4 percent of total cross-border payments in goods trade, reflecting a 7-percent rise over the past year.
This surge underscores the yuan’s growing prominence amid global efforts to reduce reliance on the U.S. dollar. While the yuan’s international adoption is still developing, its potential for extensive use in offshore markets is significant, supported by China's economic resilience and its extensive web of global trade and business partnerships.
The Belt and Road Initiative has been instrumental in fostering these connections, attracting numerous countries and regions in a collective pursuit of growth and development. Within this vast network, the yuan is well-positioned to become an increasingly acceptable instrument for international transactions and settlements.
The Chinese central bank has authorized 31 yuan-clearing banks across 29 countries and regions, achieving comprehensive coverage on all continents. According to recent SWIFT data, the yuan represented 3.71 percent of global payments by value in September, nearly doubling from 1.91 percent in January.
An increasing number of countries are adopting currencies other than the dollar for trade and diversifying their foreign exchange reserves to mitigate U.S. dominance in global finance. For example, Argentina has utilized the yuan to service its foreign debt, and Pakistan is settling Russian crude oil expenses with the yuan. These steps signal accelerated de-dollarization, driven partly by concerns over U.S. fiscal and monetary policies.
Reference(s):
Rise in RMB's global acceptance: China's financial transformation
cgtn.com
