Over the past two years, international renminbi payments between ‘true offshore’ trading centres (excluding China and Hong Kong) have grown by +837% in value, compared to an overall growth of +378%, reaching a share of 3.25% in September 2014, according to SWIFT’s latest RMB Tracker.

 

True offshore international renminbi payments are transactions taking place between renminbi centres (e.g. Singapore, UK, Luxembourg, etc.) without involving China and Hong Kong.

 

Based on the RMB Tracker, clearing centres such as Singapore, the UK and the newly appointed German centre are driving true offshore use of the Chinese currency. Other countries, such as Belgium that are not normally part of the renminbi top 10, are also fuelling this offshore trend.

 

Belgium currently sits fourth for true offshore renminbi international payments. Over the last nine months, SWIFT has noted a significant increase in all renminbi offshore centres with Singapore holding its leading position at +574% growth, followed by Luxembourg (+517%) and the UK (+236%).

 

“Payments, FX and trade finance are the markers to watch for growth in renminbi internationalization,” says Alex Medana, director, securities markets, Asia-Pacific, SWIFT. “The renminbi is primarily used as a trade settlement currency, but it is worth noting that the renminbi is steadily making progress as an investment currency.  In the first nine months of 2014, 28% of securities settlement confirmations in renminbi were done outside China and Hong Kong, compared to 16% during the same period two years ago.”

 

Overall, the RMB strengthened its position as the seventh-ranked global payments currency and accounted for 1.72% of global payments, an all-time record share. In September 2014, the value of renminbi global payments increased by 13.2%, well above the average 8.1% growth for all currencies.

 

Vina Cheung, global head of renminbi internationalization, payments and cash management, HSBC, comments: "The growth in renminbi payments between offshore trading centres such as Singapore, UK and Germany is encouraging. At HSBC, we're seeing companies seize the opportunities presented by China's currency liberalization to deepen business relationships in the world's second largest economy. As China becomes ever more important to international businesses, the internationalization of its currency is creating new opportunities in trade, investment, cash management and funding.”