Global yuan use increases
Updated: 2012-09-26 09:26
By Oswald Chen in Hong Kong (China Daily)
The yuan's use worldwide grew by 15.6 percent between July and August this year, compared with an average 0.9 percent decrease in the use of all currencies over the same period, according to the financial services provider SWIFT. [Photo/China Daily]
Currency ranked 14th in payments, with market share rising by 15.6 percent
The Chinese currency has gained a stronger footing in the global arena, having been ranked as the world's 14th payments currency with its worldwide use expanding to 15.6 percent, according to the financial services provider SWIFT.
According to the RMB Tracker compiled by the SWIFT in September, the yuan as the world's 14th payments currency recorded a market share of 0.53 percent in August this year, improving on its 15th payments currency status in July, when it had a market share of 0.45 percent.
In January this year, the yuan was ranked as the world's 20th payments currency with a market share of just 0.26 percent in international trade. This means that the yuan's use in international trade has significantly improved in the first eight months of 2012.
Overall, the yuan's use worldwide grew by 15.6 percent between July and August this year, compared with an average 0.9 percent decrease in the use of all currencies over the same period.
"The yuan currency definitively will gain more popularity in international usage in the future," said Lisa O'Connor, initiative director at SWIFT, at a news conference held on Tuesday.
The SWIFT report on yuan internationalization pointed out that the yuan is currently underused in relation to the size of the mainland economy.
The mainland economy in 2010 overtook Japan as the world's second-largest economy, contributing 9.5 percent to the world's total gross domestic product. However, the Chinese currency only contributed to 0.9 percent of the world's foreign exchange market value over the same period.
The report suggested that there is ample room for the yuan's increased use in international trade.
In May 2011, approximately 10.2 percent of the mainland's foreign trade transactions were completed using the yuan. This compared with the 90 percent of US trade using the US dollar and the 70 percent of Japanese trade settled in Japanese yen.
The RMB Tracker compiled by SWIFT also revealed that Taiwan's use of the yuan currency has increased drastically since July 2011 enabling it to position itself as the next offshore yuan clearing center.
Yuan currency payments are increasingly popular in Taiwan, as nearly 24 percent of the total payments value with the mainland and Hong Kong was done using the yuan, representing a 15 percentage point hike from the start of 2012. Between July to August this year, Taiwan's yuan payments value increased by 35.4 percent.
Excluding Hong Kong and the mainland, Taiwan was ranked 7th in terms of yuan payments value out of the world's 131 countries and regions involved with yuan payments in August this year. A year earlier, Taiwan's position was 57th.
The People's Bank of China and the central bank of Taiwan signed a currency-clearing memorandum of understanding at the end of August, including the intention to appoint a yuan settlement bank in Taiwan.
SWIFT's O'Connor said that the rise of Taiwan in the offshore yuan clearing business will not exert competitive pressure on Hong Kong and Singapore's offshore yuan business as the yuan's popularity in the global arena will "lift all the offshore financial centers up".