Renminbi cross-border trade settlement

Abstract

In 2009, the Chinese authorities accelerated their efforts to internationalise the Renminbi (RMB) by launching a pilot programme in RMB trade settlement along with other complementary measures to encourage the cross-border use of the currency. This scheme allows foreign importers and exporters to use RMB as a settlement currency in their cross-border trade transactions with onshore China trading partners. The programme was expanded to cover the whole of China and the whole world. Looking ahead, further growth of cross-border trade transactions denominated in RMB is anticipated. However, the process is likely to take time and will depend on the willingness to accept RMB as the trade settlement currency. Further development of RMB settlement in international trade will require an expansion of investment channels for offshore RMB held by foreign investors and enterprises beyond deposits. Considering the potential demand of the markets, the cross-border settlement volume of the RMB in the next few years is expected to account for 30 per cent of the total export-import volume, which makes it possible for the RMB to become one of the three main settlement currencies in a few years’ time.