Beijing – As China plans to further open up its market and promote free global trade and investment, its currency yuan is expected to play a greater global role.
“The drive will make further progress after China gradually makes its capital account convertible and ease other restrictions,” central bank Governor Zhou Xiaochuan told a press conference on the sidelines of the first session of the 13th National People’s Congress.
Chinese yuan’s globalisation journey generally started from piloting renminbi settlement in cross-border trade in 2009 and picked up pace in 2016 when the International Monetary Fund included yuan in the basket of currencies that make up Special Drawing Rights, an alternative reserve asset to the dollar.
China has inked bilateral currency swap agreements with over 30 countries and regions since late 2008 to facilitate cross-border trade and investment.
The internationalisation of yuan had slowed down amid depreciation pressure since August 2015, when the People’s Bank of China (PBOC) reformed the yuan’s mid-point rate determination mechanism, but the momentum picked up in 2017 with a stronger-than-expected yuan.
Data from international financial transaction agency SWIFT showed that about 1.66% of global payments processed in January were denominated in yuan, edging up slightly from the previous month but still lower than a record high of over 2%.
In January, Pakistan’s central bank adopted the yuan as a currency for trade with China. Central banks in European countries including France and Germany are including the yuan in their forex reserve mix.