PBOC: Yuan Plays Positive Role in Global Monetary System
China’s yuan internationalization was further developed in 2019 as the yuan was increasingly used in cross-border payment and financing worldwide. More foreign central banks held yuan-denominated assets as reserves, and the yuan witnessed remarkable progress as an invoicing currency. The yuan played a positive role (link in Chinese) in the international monetary system.
In 2019, cross-border use of the yuan grew rapidly despite severe external circumstances. The total amount of cross-border yuan payments and receipts by banks on behalf of their clients was 19.67 trillion yuan ($2.83 trillion), with a year-on-year increase of 24.1%, maintaining rapid growth and reaching a record high volume. The cross-border receipts and payments were basically balanced, with a net inflow of 360.6 billion yuan.
Last year, the yuan reserves were the fifth largest in the International Monetary Fund’s Currency Composition of the Official Foreign Exchange Reserves, with a market share of 1.95%, 0.88 percentage points higher than that of 2016 when the yuan officially joined the Special Drawing Rights currency basket. The market share of the yuan in foreign exchange trading was 4.3%, 0.3 percentage points higher than that of 2016. According to latest statistics, the yuan ranked fifth as a payment currency globally, with a market share of 1.76%.
In 2019, yuan internationalization presented the following characteristics. Firstly, yuan settlement in cross-border trade and direct investment increased steadily despite an economic slowdown. Secondly, portfolio investment grew substantially, which had become the main force to promote cross-border use of the yuan. Thirdly, cross-border yuan payment policies improved constantly, and a series of high-level pilot programs were launched successively to facilitate trade and investment.
Fourthly, infrastructure for cross-border use of the yuan was further improved, and yuan clearing banks continued to expand, with the yuan Cross-Border Interbank Payment System becoming the main channel of cross-border yuan clearing and settlement. Finally, bilateral currency cooperation deepened continuously, with barriers on the use of the yuan abroad gradually removed.
This article, the summary of the “2020 RMB International Report” produced by the People’s Bank of China (PBOC), has been edited for clarity.
To read the full report, please click here.
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