Beijing would continue to advance the internationalisation of the yuan and further leverage Hong Kong’s role as a centre for offshore transactions, with the goal of aligning the currency’s share in worldwide payments with China’s proportion of global gross domestic product, according to a prominent former senior official.
It is estimated that yuan’s share in global payments would increase by 1 percentage point annually to about 17 per cent by 2035, as its usage in cross-border payments would gradually catch up to China’s position in the world’s economy, said Huang Qifan, the former mayor of the western megacity Chongqing, at the International Finance Forum (IFF) annual meeting on Friday.
“The internationalisation of the yuan will contribute to stabilising the global supply chain,” he said, suggesting China should improve yuan settlement services to facilitate the currency’s use in emerging sectors, such as cross-border e-commerce.
The yuan’s share in global payments had been on a steady rise over past years, hitting a record high of 4.74 per cent in July, according data from the Society for Worldwide Interbank Financial Telecommunication (Swift).
It did weaken to 2.93 per cent in October, but remained the fifth most active currency for global payments by value after the US dollar, euro, British pound and Japanese yen.
Swift payment data is a major indicator for the relative status of international currencies, with other metrics including frequency of use in foreign exchange markets, commodity trading and governments’ foreign reserves.