China’s yuan broke into the top five as a world payment currency in November, overtaking the Canadian dollar and the Australian dollar, the Society for Worldwide Interbank Financial Telecommunication said on Wednesday.
In December, the Chinese currency reached a record high share of 2.17 percent in global payments by value, rising from 0.63 percent in January 2013. It now trails the Japanese yen, which has a share of 2.69 percent.
“The renminbi breaking into the top five world payment currencies is a milestone. It is a great testimony to the internationalization of the renminbi and confirms its transition from an ’emerging’ to a ‘business as usual’ payment currency,” said Wim Raymaekers, head of banking markets at SWIFT.
“The rise of various offshore renminbi clearing centers around the world, including eight new agreements signed with the People’s Bank of China in 2014, was a key driver of this growth,” Raymaekers said.
Global renminbi payments increased in value by 20.3 percent in December, compared with a 14.9 percent rise for all currencies. Over the past two years, the renminbi has shown consistent triple-digit growth with an increase in the value of payments by 321 percent, SWIFT data showed.
China’s currency continued its ascent in global payments settlement, trade and currency investment with the support of a rapidly expanding network of offshore yuan-clearing centers, which facilitate direct access to China’s onshore financial markets, said Fitch Ratings in a report earlier this month.
In 2014, eight offshore yuan-clearing centers were established in major financial centers such as London, Frankfurt and Luxembourg. An additional two were established in Kuala Lumpur and Bangkok. There are now 14 offshore yuan-clearing centers.
Fitch Ratings expects the proliferation of these offshore yuan-clearing centers to drive greater issuance of dim sum bonds (yuan-denominated debt issued offshore) by Chinese and other governments, financial institutions and corporations in 2015.