Internationalization of China's currency has gained momentum lately, such as the launch last week of offshore futures contracts deliverable in yuan by Chicago-based exchange operator CME Group Inc.

Financial hubs London, Singapore and Hong Kong have become centers for transactions denominated in yuan since the People's Bank of China in July 2009 introduced plans to make the currency a bigger player in world markets.

In Asia, Citibank Singapore reported strong growth in offshore yuan-related business. This includes, over the past two years, a doubling of new accounts denominated in the Chinese currency and its increased use in processing payments.

In February, China named Industrial & Commercial Bank of China Ltd, the world's biggest bank by market capitalization, as the clearing bank for yuan-denominated trades in Singapore.

Also last month, the Bank of England and the PBOC announced plans for a three-year currency swap line for financing trade and direct investments between the UK and China. The agreement, which the BOE said was nearly final, enhances London's push to become an offshore hub for yuan-related trades. The UK would become the first major developed economy to have a currency swap line with China, which has similar agreements with over 15 other central banks, mostly in emerging-market countries.

KC Lam, the Singapore-based head of foreign-exchange products for Asia at CME Group, said allowing offshore yuan futures is among several "unprecedented and ambitious" moves by the Chinese government to internationalize the currency. Another is a pilot program, begun in 2010, for settling yuan-denominated trades through Hong Kong banks.

The yuan, Lam said, is "on track to be one of the world's reserve currencies".

Beijing's ambition has gone a long way toward ensuring circulation of the yuan domestically and offshore, the CME executive said, adding that its use in third-party transactions and trade settlement will be crucial for further progress.

He said a further boost will come from CME's introduction of offshore, Hong Kong-based trading of foreign-exchange futures contracts deliverable in yuan via the company's CME Globex electronic trading platform. A year ago, CME formed an alliance with Bank of China Ltd, a key promoter of global business in yuan that deals in clearing, settlement, offshore yuan services and futures trading.

By the end of 2010, deposits in offshore yuan accounts -outside the Chinese mainland, mostly in Hong Kong - totaled 300 billion yuan (about $47.5 billion). Two years later, at the end of 2012, that figure had doubled.

Such developments have caused some in the financial-services industry to wonder if the yuan will challenge the US dollar as the world's reserve currency. Many, however, believe the Chinese currency's increased use globally is good for both the United States and the world. A more-open financial market in China will generate more trade and help economic growth, many experts have said.

Ronald Schramm, founder and CEO of analytics firm China Macro Finance, said CME's move indicates that "the US is off to a good start". Internationalization of the yuan, according to the former Columbia University business professor, would be "a good thing for the US in terms of greater flexibility" in the yuan-dollar exchange rate.

A stronger yuan is something US officials have long sought, Schramm pointed out.

Yuan-denominated settlements in cross-border trade rose 41 percent last year from 2011 and investments settled in the currency surged 153 percent, according to the PBOC. But transactions in the US declined 38 percent in December from November, making 2012 a flat year for use of the Chinese currency in the world's biggest economy.

Simon Derrick, London-based chief currency strategist at Bank of New York Mellon Corp, doesn't see the recent internationalization moves as producing a scenario in which the yuan's prospects as a reserve currency is a major issue.

"While a number of central banks have dipped their toes in the water in holding RMB [renminbi, or yuan] in their reserves, the amounts are still extremely small," he said.

Gregory Chin, a researcher on international monetary matters at Canada's Centre for International Governance Innovation, said the yuan is still far from challenging the dollar's global predominance.

"The question is whether we are seeing concerted steps forward in gradually expanding the international use of the RMB," he said.

Contact the writer at: yuweizhang@chinadailyusa.com