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Global yuan payments triple in 2 years: Swift

Outside of China and HK, Singapore is number one in yuan world payments
Friday, September 26, 2014 - 00:00

[SINGAPORE] While the yuan's market share remains pale in comparison to the greenback, its growing popularity is undeniable.

According to Swift's latest renminbi (RMB) tracker, over the past two years, yuan payments worldwide have nearly tripled in value.

While Swift did not disclose the absolute value, Fred DiCoco, Asia-Pacific head of sales & relationship management for BNY Mellon's treasury services business, had previously estimated that around 20 per cent of China's US$4 trillion in annual foreign trade is conducted in yuan today.

Swift, which launched the tracker in September 2012 to monitor the yuan's progress towards becoming an international currency, said the Chinese currency is now supported by a much broader base. About 35 per cent more financial institutions are using the yuan for payments with China and Hong Kong.

Asia leads the way at nearly 40 per cent adoption, an increase of 22 per cent since 2012.

The Americas follow at 32 per cent adoption, up 44 per cent. The adoption in Europe is at 31 per cent, up 47 per cent, while in the Middle East and Africa, it is at 26 per cent, up a staggering 83 per cent during the two-year period.

"More financial institutions using the RMB will improve the utility of the currency in Hong Kong, China and other offshore centres," says Stephen Gilderdale, head of New Business Development at Swift.

Overall, the yuan strengthened its position as the seventh-ranked global payments currency and accounted for 1.64 per cent of global payments, an increase from 1.57 per cent in July 2014.

In August 2014, the value of the yuan global payments decreased by 6 per cent, whilst all currencies dropped by 10 per cent.

Swift said the trend is most likely attributable to lower seasonal payments activity.

Mr DiCoco had noted that while Hong Kong is still the undisputed No 1 offshore yuan payments centre with a 71 per cent market share, its leadership position is slowly eroding, having dropped by around 10 per cent over the last three years with London and Singapore both establishing themselves as strong alternatives.

In an April report, Swift data showed that Singapore's yuan payments value increased by 375 per cent between March 2013 and March 2014, making Singapore number one in terms of yuan world payments value, excluding mainland China and Hong Kong.

Singapore's weight represents 6.8 per cent of the overall yuan payments value, second behind Hong Kong, which still leads with 72.4 per cent.

London overtook Singapore in June 2012, but, since February 2014, it has slipped behind Singapore despite a good growth rate of 203 per cent year-over-year from 2013. London now carries the weight of 5.9 per cent.

Senior Minister of State for Finance Josephine Teo has said Singapore is already reaping the rewards of the push, with more of the Chinese currency moving here.

Total yuan deposits placed in Singapore at end-June stood at 254 billion yuan (S$52.5 billion), a jump of 84 per cent compared with the same period a year earlier.

Yuan-denominated loans, including those for trade finance, have also risen 88 per cent to reach some 500 trillion yuan over the same period.

Growth in yuan foreign exchange transactions over the period is also strong, as the average daily traded volume jumped four times to reach nearly US$70 billion.