Renminbi to become top three currency within 10 years

18 July 2013

According to survey published by EuroFinance and sponsored by Standard Chartered Bank 73% of global corporate treasury professionals expect the Chinese renminbi (RMB) to become the third most important global currency, or better, within 10 years.

The increasing internationalisation of RMB has been evident for years with Singapore, London and other offshore centres fighting for volume and ever-lighter laws establishing the ‘dim sum’ markets, but there is still some way to go – and further liberalisation – before RMB can be considered a global reserve currency or true competitor to the US dollar (USD) or euro (EUR).

In anticipation of this eventual outcome, however, trade finance instruments and many other financial services are now being offered in RMB and the migration is definitely underway, necessitating new connectivity, technology and business procedures.

Eighty-five per cent of Asia-based treasurers say the RMB will be at least the third most important currency by 2023, found the EuroFinance survey.

Of the 307 survey respondents, optimism was highest among corporates that already use at least one offshore RMB product. Seventy-nine per cent of those corporates think the RMB will be global number three currency or better, compared with 70% for those who don’t currently use the currency.

The EuroFinance survey, undertaken in association with Standard Chartered Bank, was designed to understand current sentiment of the global corporate treasury community towards the offshore RMB as a currency, their planned usage and the factors limiting their uptake of the currency.

“The potential of the RMB’s use as a currency for trade settlement matches corporate perceptions of the importance of China as a trading partner both now and in the future,” said Katharine Morton, editorial director of EuroFinance. “Deregulation of the offshore RMB is a work in progress and it will be fascinating to see how corporate usage develops in the next decade.”

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