rmb rises to 4th global payment currency
by li linxu
the chinese currency, rmb, has overtaken the japanese yen to become the fourth global payment currency, marking an important milestone in its internationalization.
rmb internationalization is gaining momentum. it has been well used in cross-border trade and investment transactions, according to the 2022 rmb internationalization report recently released by the people's bank of china.
as of december 2021, rmb's share of international payments increased to 2.7 percent, surpassing that of the japanese yen, according to swift, a global provider of financial messaging services.
in january 2022, the figure climbed further to 3.2 percent, a record high, said swift.
more foreign central banks held rmb-denominated assets as reserves, and rmb as an invoicing currency witnessed gradual progress, said the report.
statistics from imf show that by the end of the first quarter of 2022, the proportion of rmb in globally disclosed holdings of foreign exchange reserves had reached 2.88 percent, 1.8 percentage points higher than that of 2016, when rmb was officially included in the special drawing right (sdr) currency basket.
in may 2022, imf raised rmb's weighting in the sdr currency basket to 12.28 percent from 10.92 percent, a recognition of greater freedom in rmb use.
real economy related cross-border rmb settlement maintained a rapid growth, especially in the sectors of commodity and cross-border e-commerce.
last year, the cross-border rmb receipts and payments of major commodities, such as crude oil, iron ore and copper, reached 405 billion rmb, up 42.8 percent year-on-year.
as the exchange rate of rmb is moving in both directions with enhanced flexibility, there is a stronger need for market entities to use rmb as hedge risk of exchange rate, indicating a greater capability of rmb in serving real economy.
the opening-up of china's financial market is continuously making progress and rmb assets still remain highly attractive to global investors, said the report.