The proportion of RMB global payments has reached a new high, ranking as the fourth most active currency in the world for nine consecutive months

Recently, the Society for Worldwide Interbank Financial Telecommunication (Swift) released data showing that in July 2024, the Chinese yuan maintained its position as the fourth most active currency in the world based on monetary statistics, accounting for 4.74%. This is the ninth consecutive month that the Chinese yuan has maintained its position as the fourth most active currency in the world, with a record high proportion of 4.74%.

Compared to June 2024, the total amount of RMB payments in July increased by 13.37%, while the total amount of all currency payments increased by 10.29%.

In July, the share of the Chinese yuan as a global currency in the trade financing market reached 6%, second only to the US dollar. It has surpassed the euro for two consecutive months, and the share gap has widened from 0.07% in June to 0.17% in July.

Chao Zhen, a researcher at the Hainan Financial Research Institute of Bank of China, believes in an interview with Securities Daily that the increase in the international payment share of the RMB is due to the combined effect of multiple factors. On the one hand, China's stable macro environment and economic fundamentals are fundamental to the enhancement of the international status of the renminbi. On the other hand, China's growing trade volume is the main support for the cross-border flow of the renminbi.

The data recently released by the State Administration of Foreign Exchange shows that in July, the foreign-related income of bank clients increased by 9% month on month, and the expenditure increased by 7%. Among them, China's foreign trade has continued to grow rapidly, driving a 48% month on month increase in net inflows of cross-border funds under goods trade, reaching the highest level in history for the same period.

Chao Zhen stated that the two-way opening of China's financial market has increased the cross-border use of the renminbi and is also one of the reasons for promoting the increase in the international payment share of the renminbi. The construction of Shanghai Shenzhen Hong Kong Stock Connect, mutual fund recognition, Bond Connect, cross-border wealth management link and other capital market connectivity channels has broadened the way for foreign investors to enter the Chinese market and Chinese investors to enter the international market, and the cross-border receipt and payment of RMB has grown rapidly. In addition, changes in the international economic situation have driven the use of the Renminbi. With the continuous promotion of local currency settlement in cross-border trade with emerging market countries, the application of RMB in cross-border trade settlement with China will also expand in more and more countries.

It is worth mentioning that the international "circle of friends" of the Chinese yuan is still expanding. On August 19, it was reported that the People's Bank of China and the National Bank of Vietnam signed a memorandum of understanding on cooperation to further promote bilateral cooperation in such fields as local currency settlement, local currency swap and cross-border payment interconnection.

In the Report on the Implementation of China's Monetary Policy in the Second Quarter of 2024, the People's Bank of China pointed out that at the end of June, under the bilateral local currency swap agreement signed between the People's Bank of China and the overseas monetary authorities, the overseas monetary authorities used RMB balance of 104.5 billion yuan, and the People's Bank of China used foreign currency balance of 481 million dollars, which played a positive role in promoting bilateral trade and investment.