International RMB Payments Growth Skyrocketing

A record number of RMB payments are being made between offshore trading centres, according to a recent article by Cash & Treasury Management File.

In fact, over the past two years, the amount of international RMB payments from the centres recently grew by 837 percent, compared to a growth of 378 percent in September of this year. True offshore international RMB payments, according to the articles are payments taking place between places like Singapore, United Kingdom, Germany and Luxembourg, but exclude China and Hong Kong.

“Payments, FX and trade finance are the markers to watch for growth in RMB internationalisation,” Alex Medana, Director, Securities Markets, Asia Pacific, SWIFT, said in the C&TM article. “The RMB is primarily used as a trade settlement currency, but it is worth noting that the RMB is steadily making progress as an investment currency. In the first nine months of 2014, 28 percent of securities settlement confirmations in RMB were done outside China and Hong Kong, compared to 16 percent during the same period two years ago.”

The top contributors of RMB payments, according to C&TM’s tracker, Singapore, U.K. and the German centre are the main drivers of RMB use. In a nine-month period, SWIFT has recorded Singapore having a 574 percent growth, followed by Luxembourg at a 517 percent growth and the U.K. at a 236 percent growth. This has lead to the RMB increasing its global payments position. The tracker also had Belgium forth on the offshore RMB international payments chart, which the C&TM article pointed out was unusual for the country as it isn’t normally part of the top ten.

“Unsurprisingly, the RMB strengthened its position as the seventh-ranked global payments currency and accounted for 1.72 percent of global payments, an all-time record share. In September 2014, the value of RMB global payments increased by 13.2 percent, well above the average 8.1 percent growth for all currencies,” according to the C&TM article.

The growth trend of RMB international payments being made is not expected to slow down in the next few years, and as the C&TB article states, more instances of RMB are released at least weekly — including the example of corporations in Taiwan to increasingly using RMB for Payments, according to Bank of America Merrill Lynch.

The research firm Aite, as cited in the article suggests the same: “The use of the renminbi in trade finance will increase significantly over the next three to five years. While the currency faces plenty of headwinds, we believe that there is enough support to help it grow, particularly availability and use of RMB-denominated assets,” its findings conclude.