The People’s Bank of China Releases the Report on Renminbi’s International Development

The RMB international payments share improved to 2.7% in December 2021, surpassing the Japanese yen as the world's fourth payment currency, and further increased to a record high of 3.2% in January 2022. Currency Composition of Official Foreign Exchange Reserves (COFER) data released by the International Monetary Fund (IMF) show that the RMB's share of global foreign exchange reserves reached 2.88% in the first quarter of 2022, up 1.8 percentage points from 2016 when the RMB first joined the Special Drawing Rights (SDR) currency basket, ranking fifth among major reserve currencies.

Since 2021, the People's Bank of China has adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely implemented the decision and deployment of the Party Central Committee and the State Council, completely, accurately and comprehensively carried out the new development concept, adhered to reform and opening-up and mutual benefit, based on the independent choice of market-driven enterprises, and steadily and prudently promoted RMB internationalization, providing strong support for the smooth operation of the real economy. The indicators of RMB internationalization are generally positive, with RMB steadily improving its payment currency function, further deepening RMB investments and financing currency function, rising reserve currency function and gradually enhancing its denomination currency function.

Since 2021, RMB cross-border receipts and payments have continued to grow from a high base in the previous year. 2021, the total amount of RMB cross-border receipts and payments by banks on behalf of customers was RMB 36.6 trillion, up 29.0% year-on-year, a record high. RMB cross-border payments and receipts were generally balanced, with a cumulative net inflow of RMB 404.47 billion for the year. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the RMB's share of international payments increased to 2.7% in December 2021, overtaking the Japanese yen to become the world's fourth payment currency, and further increased to 3.2% in January 2022, a record high. Currency Composition of Official Foreign Exchange Reserves (COFER) data released by the International Monetary Fund (IMF) show that the RMB's share of global foreign exchange reserves reached 2.88% in the first quarter of 2022, up 1.8 percentage points from 2016 when the RMB first joined the Special Drawing Rights (SDR) currency basket, ranking fifth among major reserve currencies. in May 2022, the The International Monetary Fund (IMF) raised the weighting of the RMB in the Special Drawing Rights (SDR) from 10.92% to 12.28%, reflecting recognition of the increased degree of free access to the RMB.

Cross-border RMB settlement volume related to the real economy maintained rapid growth, with areas such as bulk commodities and cross-border e-commerce becoming new growth points and cross-border two-way investment activities remaining active. The RMB exchange rate generally showed a two-way fluctuation trend, and the endogenous demand of market players to use RMB to hedge exchange rate risks gradually grew. The basic system of RMB cross-border investment and financing, transaction settlement, etc. continues to be improved, and the ability to serve the real economy continues to be enhanced.

The opening up of China's financial market continues to advance, RMB assets remain highly attractive to global investors, and there is an overall net inflow of RMB cross-border receipts and payments under securities investment. By the end of 2021, the total amount of domestic RMB stocks, bonds, loans and deposits held by foreign entities was RMB 10.83 trillion, up 20.5% year-on-year. The offshore RMB market gradually picked up and transactions became more active. By the end of 2021, RMB deposits in major offshore markets were close to 1.50 trillion RMB.

In the next phase, the People's Bank of China will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely implement the decision and deployment of the Party Central Committee and the State Council, coordinate development and security, and prudently promote RMB internationalization on the basis of market-driven and independent choice of enterprises. Further consolidate the basic institutional arrangements for cross-border use of RMB, meet the demand for RMB use in the real sector, promote a higher level of two-way opening of the financial market, and facilitate a virtuous cycle in the onshore and offshore RMB markets. At the same time, it will continue to improve the macro-prudential management framework for cross-border capital flows in both domestic and foreign currencies, establish a sound monitoring, assessment and early warning system for cross-border capital flows, and firmly guard the bottom line of no systemic risks.