Renminbi internationalization to continue, despite setbacks

Renminbi internationalization is set to continue, despite a temporary decline in the Chinese currency's payment value in 2016, according to the latest renminbi tracker released on Thursday by the Society for Worldwide Interbank Financial Telecommunication.

Chinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, China, in this March 30, 2016 file picture.  [Photo/Agencies]

The latest SWIFT data showed the value of renminbi payments declined by 29.5 percent in 2016, including a big decline in the month of December. Renminbi's share of international payments compared to all other currencies dropped to 1.68 percent in December from 2.31 percent one year earlier, ending the year as the sixth most-active currency for international payments.

Michael Moon, head of payments markets for Asia Pacific at SWIFT, said the slowdown of the Chinese economy and the volatility of the renminbi exchange rate were among factors leading to the decline, but he said he expects the renminbi's internationalization to continue.

“Despite the slowdown, RMB internationalization will continue to benefit from major financial infrastructure milestones, such as CIPS (China International Payment System) for cross-border clearing and additional RMB offshore clearing centers," said Moon.

CIPS was launched by the Chinese central bank in 2015. Known as the worldwide payments superhighway for the renminbi, it connects China with most offshore renminbicenters and increases global usage of the currency by cutting transaction costs and processing time.

In 2016, an agreement was signed between CIPS and SWIFT to grow renminbi payments traffic outside China. Moon said this agreement will have a positive impact on the continued internationalization of the currency.