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Europe is fuelling offshore RMB, Swift reports
Amid its still unresolved sovereign debt crises, Europe is quietly becoming the next biggest contributor to global renminbi transactions. It now represents 47 percent in renminbi payments value, overtaking Asia-Pacific (excluding China and Hong Kong).
The Asset 23 Apr 2012

Amid its still unresolved sovereign debt crises, Europe is quietly becoming the next biggest contributor to global renminbi transactions. It now represents 47 percent in renminbi payments value, overtaking Asia-Pacific (excluding China and Hong Kong).

 
This month’s Swift RMB Tracker shows how Europe quickly adopted the renminbi over the past year. This development is attributed to the debt crises in the Eurozone that are deemed to have given an incentive, or at least an increased inclination, for European-based financial institutions to adopt the Chinese currency. Recently, London is actively positioning itself as a next major offshore renminbi centre, but the support from Europe for the currency is broader than that.
 
According to SWIFT figures, March was a good month for payments worldwide, with an average growth of 8.6 percent versus February 2012. The renminbi did slightly better and grew by 13.2 percent to position #16 and a share of 0.35 percent (versus #17 and 0.33 percent share in previous month).
 
An interesting development is that Europe is now the biggest contributor with 47 percent of renminbi payments, beside China and Hong Kong, using the Chinese currency for 6.7 percent of all its payments with China and Hong Kong.
 
After a slow start, Europe is quickly adopting the renminbi. The first chart shows which key regions, besides China and Hong Kong, are adopting the renminbi for payments. Swift looked at value of payments in renminbi versus total value of payments across currencies between that region and China/Hong Kong. Asia Pacific was quick to adopt the currency, and did 7.2 percent of all payments with China/Hong Kong in renminbi in Q1 2012. Europe had a slower start but is catching up quickly with 6.7 percent. Africa and the Middle East show strong adoption, mainly driven by Qatar, the UAE and some extent South Africa, but the overall value is pretty small. In the Americas, the renminbi needle did not move much: there are some renminbi flows with the US and relatively good adoption by Canada but almost no renminbi activity with Latin America so far.
 
 
   
 
Europe has overtaken Asia-Pacific (ex Hong Kong & China) in renminbi payments value contribution with the second chart showing that while its adoption rate is slightly below Asia’s, Europe is actually contributing more to renminbi payments than Asia-Pacific, thanks to its bigger absolute payments value. Excluding China and Hong Kong, Europe’s share in renminbi payments increased from 36 percent in Q1 2011 to 47 percent in Q1 2012, whereas Asia-Pacific’s share declined from 59 percent to 41 percent.
 

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