RMB becomes the 4th payment currency in the world
International Business News – According to the “RMB Internationalization Report 2022” released by the People’s Bank of China, the RMB’s international payment share improved to 2.7% in December 2021, overtaking the Japanese yen to become the world’s fourth payment currency, and further increased to 3.2% in January 2022, a record high.
Since 2021, RMB cross-border receipts and payments have continued to grow from a high base in the previous year. 2021, the total amount of RMB cross-border receipts and payments by banks on behalf of customers was RMB 36.6 trillion, up 29.0% year-on-year and a record high. RMB cross-border payments and receipts were generally balanced, with a cumulative net inflow of RMB 404.47 billion for the year. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the RMB’s share of international payments increased to 2.7% in December 2021, overtaking the Japanese yen to become the world’s fourth payment currency, and further increased to 3.2% in January 2022, a record high. Currency Composition of Official Foreign Exchange Reserves (COFER) data released by the International Monetary Fund (IMF) show that the RMB’s share of global foreign exchange reserves reached 2.88% in the first quarter of 2022, up 1.8 percentage points from 2016 when the RMB first joined the Special Drawing Rights (SDR) currency basket, ranking fifth among major reserve currencies.In May 2022, the International Monetary Fund (IMF) raised the RMB’s weighting in the Special Drawing Rights (SDR) from 10.92% to 12.28%, reflecting recognition of the increased degree of free access to the RMB.
The volume of cross-border RMB settlement related to the real economy maintained rapid growth, with areas such as bulk commodities and cross-border e-commerce becoming new growth points, and cross-border two-way investment activities continued to be active. The RMB exchange rate generally showed a two-way fluctuation trend, and the endogenous demand of market players to use RMB to hedge exchange rate risks gradually grew. The basic system of RMB cross-border investment and financing, transaction settlement, etc. continues to be improved, and the ability to serve the real economy continues to be enhanced.
The opening up of China’s financial market continues to advance, RMB assets remain highly attractive to global investors, and there is an overall net inflow of RMB cross-border receipts and payments under securities investment. By the end of 2021, the total amount of domestic RMB stocks, bonds, loans and deposits held by foreign entities was RMB 10.83 trillion, up 20.5% year-on-year. The offshore RMB market gradually picked up and transactions became more active. By the end of 2021, RMB deposits in major offshore markets were close to RMB 1.50 trillion.