Chinese currency renminbi (yuan) has maintained a stable position in global system as the use of the yuan became more frequent globally in 2016, said a central bank report released last Tuesday, predicting that yuan’s cross-border financial transaction is set to continue its growing momentum.
The Chinese currency has taken steady steps on its global march, the People’s Bank of China (PBOC) said in the report on internationalization of yuan.
As of the end of last year, 18 countries and regions had quota allotments under the Renminbi Qualified Foreign Institutional Investor (RQFII) program that amounted to 1.51 trillion yuan ($228 billion), the report said.
In addition, a total of 407 overseas institutions were approved to access China’s interbank bond market, with the registered investment amounting to 1.97 trillion yuan ($298 billion).
As an effort to boost global use of yuan, the central bank signed bilateral currency swap agreements worth 3.3 trillion yuan ($498 billion) in total with the central banks or currency regulators in 36 countries and regions across the world, the bank said in the report.
China also made yuan settlement arrangements in 23 countries and regions covering Southeast Asia, Europe, Middle East, Americas, Oceania and Africa.
By the end of 2016, up to 60 countries and regions had included yuan in their foreign-currency reserves.
The central bank will insist on a market-oriented direction in exchange rate reform, further optimize the market-based exchange rate regime, and increase the flexibility of the rate, in a bid to cement yuan’s role in global currency system, it vowed in the report.
The still growing Chinese economy will certainly induce more frequent use of yuan, and an accelerated internalization of the currency would enhance China’s leading role in the world, Christine Lagarde, Managing Director of the International Monetary Fund (IMF) told the People’s Daily in a recent interview.
In a milestone for the yuan’s internationalization, the currency joined the IMF Special Drawing Right basket in October last year, making it the fifth currency in the basket, joining the US dollar, euro, Japanese yen and British pound.
The yuan’s share as an international payments currency reached 1.68% in December 2016, ending the year as the sixth most active currency for international payments, according to SWIFT, a global member-owned cooperative that provides financial messaging services.
By Zhao Cheng from People’s Daily/NewsGhana.com.gh