China’s RMB Yuan Gains Momentum To Become Global Currency
China’s currency, the RMB Yuan, “is increasingly competing” against the USD, and the Euro as it moves closer to gaining a global currency status.
In a Key step, the International Monetary Fund (IMF) is meeting this month to “study the possibility of incorporating the Yuan” into its basket of major reserve currencies, known as the Special Drawing Rights (SDR), said a report published over the weekend by Research for Traders.
Titled “The Yuan already displaced Japan and puts on the pressure,” the report said that “China’s currency has bumped the Japanese Yen from 4th to 5th place in the classification chart of currencies used for international payments.”
The Yuan overtook the Japanese Yen, already in the SDR basket, to become the 4th most used world payment currency in August, global transaction services organization SWIFT said on 6 October.
The Top 3 currencies are the US Dollar, the Euro and the Great British Pound.
The chart rates currencies according to their share of global trade transactions, with the USD leading with 43% in August, followed by the Euro (28%, the GBP (9%), RMB Yuan (2.79%) and Yen (2.45%).
“The underlying growth of the RMB is still slow, but steady,” according to the report, noting that the Yuan registered a higher percentage in recent months.
“The role of the yuan as an international currency is strengthening, based on the larger number of companies that use the RMB to settle payments, as well as the number of banks that accept payments in the currency,” it said.
To pave the way for the internationalization of the RMB Yuan China has put in place monetary reforms and “strengthened monetary cooperation with the rest of the world,” signing currency exchange agreements with 23 countries and regions.
In addition, many countries in Southeast Asia, Eastern Europe and Africa have accepted or are considering the possibility of using the Yuan as “an official reserve currency,” it said.
The Asian economic giant gave the internationalization process a boost on 8 October, when it launched the China International Payment System to facilitate global transactions in its national currency.
The People’s Bank of China (PBOC), the country’s central bank, said the move would also be essential to increase the transparency and credibility of its economic statistics.
China’s RMB Yuan is increasingly competing against the USD and the Euro, and is advancing in the right direction, and very soon it can be considered as a complete currency.
Stay tuned…
HeffX-LTN
Paul Ebeling
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