RMB internationalization 2.0: Where business flows, ecosystem grows

Renminbi internationalization is entering what I would call its 2.0 window.

The question is no longer simply whether the RMB appears in more cross-border transactions, but whether companies and investors are using it as a full-fledged international currency — to hold, hedge, invest and finance in ways that align naturally with their business needs.

The shift is already visible in the data. According to the People's Bank of China — the country's central bank — overseas RMB loans rose 31.7 percent year-on-year in the first half. More broadly, the RMB is now the leading currency for China's cross-border receipts and payments, and the world's second most-used currency in trade finance.

Two forces are driving this. The global monetary system is becoming more multipolar, creating greater demand for alternatives to overreliance on a single currency. At the same time, as global supply chains shift, Chinese companies are operating overseas in new ways — building factories, hiring locally and integrating more deeply into regional markets.

Consider a Chinese manufacturer building capacity in Southeast Asia, the Middle East or Europe. Its parent company keeps its books in RMB. Some equipment and components still come from China. Local wages and taxes are paid in local currency, while some global inputs may still be priced in US dollars. In that setting, using RMB for China-related payments becomes a natural business choice: it reduces currency mismatch, lowers funding costs and creates a natural hedge.

This is where RMB internationalization 2.0 becomes tangible: in contracts, working capital, treasury and investment decisions. A currency becomes international when businesses keep choosing it because it works.

For this ecosystem to grow sustainably, four pillars must reinforce one another.

First, the offshore RMB pool must deepen alongside demand. A deeper pool supports efficient pricing, market confidence and resilience. Hong Kong already processes around 75 percent of global offshore RMB payments, yet liquidity has not always kept pace with expanding settlement, financing and investment needs.

Encouragingly, the gap is narrowing. In July 2026, the Hong Kong Monetary Authority further increased the size of the Renminbi Business Facility from 200 billion yuan ($29.8 billion) to 500 billion yuan, reflecting strong take-up and reinforcing Hong Kong's role as a scalable offshore RMB liquidity hub supporting real-economy financing.

As one of Hong Kong's three note-issuing banks, Standard Chartered sees rising settlement volumes firsthand. The priority now is to deepen the pool, broaden liquidity-management tools and help funding flow more readily to genuine commercial demand.

Second, the RMB must also reach a broader circle of markets and businesses. China's local-currency swap agreements with more than 30 countries and regions provide an important foundation. Traditionally viewed as emergency backstops, their actual use has remained limited. As global trade and investment patterns evolve, they can increasingly support liquidity for day-to-day commercial activity.

The opportunity is to turn this policy network into an ecosystem of commercial use — by enabling companies, financial institutions and investors to encounter and choose the RMB naturally in trade and investment. As swap lines become bridges for ordinary transactions, the RMB's international role can grow more sustainably.

Third, beyond settlement, the RMB must also offer investors more reasons — and more ways — to hold it. Settlement may be the entry point; investment and financing create a lasting cycle of demand.

Beyond highly liquid government bonds and the dim sum bond market, choices have historically been narrow. Deeper credit markets and a broader range of derivatives — including swaps — would give overseas investors more flexibility to allocate capital and manage risk.

Encouragingly, the market is gaining both depth and breadth. In the first half, Panda bond issuances exceeded 160 billion yuan, up 69 percent year-on-year, while broadly defined dim sum bond issuances surpassed 900 billion yuan, an increase of around 50 percent.

Product innovation is advancing in tandem. In May, Standard Chartered China supported a qualified foreign investor in completing a Chinese government bond futures transaction on the China Financial Futures Exchange — the first participation by an overseas institution in China's onshore government bond futures market. Just last month, Standard Chartered also participated in the inaugural transactions in five-year offshore Chinese government bond futures, giving international investors a more efficient and transparent tool to manage interest-rate risk.

The next step is to build a fuller ecosystem of RMB-denominated assets, credit products, collateral and hedging tools — making the RMB a credible investment choice rather than a cost to manage.

And fourth, none of this can happen at scale without infrastructure that continues to evolve. The Cross-border Interbank Payment System is central to this evolution, making cross-border RMB transactions more efficient and secure. CIPS is expanding steadily, with the value of transactions processed recording a compound annual growth rate of more than 21 percent between 2023 and 2025.

But building the channel is only the beginning. Liquidity, products and business flows must move through it at scale. As the first foreign bank to become a direct CIPS participant both onshore and offshore, Standard Chartered has seen that link first-hand. Our role has been to bring more institutions into the network and channel more business flows through it. In 2025, Standard Chartered China and Standard Chartered Hong Kong served more indirect participants than any other foreign bank, while ranking among the leading direct participants by transaction value.

Digital infrastructure provides a further boost. Together, mBridge and Cross-border e-CNY Transfer Services provide complementary rails that shorten settlement routes and reduce time and cost. They augment existing infrastructure by making cross-border RMB flows more automated and easier to embed in business activity, though both are still in early stages of adoption.

These market developments are underpinned by clear and sustained policy support, including in China's 15th Five-Year Plan. We see Shanghai and Hong Kong each have a distinct but complementary role to play — as China's financial "twin engines". Shanghai's strength lies in the depth of the onshore market and its potential to develop more RMB-denominated assets and risk-management tools. Hong Kong brings offshore liquidity, global connectivity and its established role as a leading offshore RMB hub.

The tide is already rising. Making the RMB easier to use, hedge, invest and finance will give companies more tools to navigate a complex operating environment, while supporting China's high-quality opening-up and a more balanced global financial system.

Ultimately, the global economy will benefit from the deepening internationalization of the RMB.

The writer is CEO & executive vice-chair of Standard Chartered China.

The views do not necessarily reflect those of China Daily.