On October 13 2013, the People's Bank of China signed a 150 billion yuan/815 billion rubles bilateral currency swap agreement with the Central Bank of the Russian Federation, representing further progress in the RMB internalization process.

Since the end of 2008, the People's Bank of China has signed bilateral currency swap agreements with more than 20 foreign monetary authorities.

RMB international settlement has formed its initial global networks

China has signed five RMB clearing and settlement arrangement cooperation MoUs this year, covering London, Frankfurt, Paris and Luxembourg in Europe, and has set up an RMB clearing service in Seoul of South Korea.

With the improvement of the global settlement service, cross-border RMB settlement is maintaining rapid growth this year. Data from China’s central bank show that from January to July, cumulative cross-border RMB settlements under the regular business of national banking financial institutions reached 3.77 trillion yuan, an increase of 55.9 percent against 2013.

Experts believe that the current 24-hour RMB clearing service available in key areas in Asia, Europe and Australia means that the initial formation of the RMB international settlement is in place, and the process is now in a phase of acceleration.

The RMB international clearing service will provide technical support for huge overseas financial transactions, and help local residents and businesses better understand and accept the Chinese yuan. In addition, the clearing system can keep control of the flow of funds, which can help better protect China’s financial security.

Direct trading between RMB and foreign currencies is beneficial to avoid risks and reduce costs

Direct trading of the RMB and the British pound in the inter-bank foreign exchange market was officially launched on June 18, 2014, following the direct trading of the RMB against foreign currencies including the Japanese yen, Australian dollar, and New Zealand dollar.

In July, the Seoul Branch of the Industrial and Commercial Bank of China reported the direct quotation of the exchange rate of RMB against the Won in the Seoul foreign exchange market for the first time, and successfully completed transactions with a South Korean commercial bank

On September 29, authorized by China’s central bank, the China Foreign Exchange Trading Center announced direct trading of the RMB against the euro in the inter-bank foreign exchange market.

Direct trading between the RMB and major foreign currencies will not only save exchange costs for the parties, but also help to get rid of the intermediary role of the U.S. dollar, which will ultimately help to promote the use of the yuan in bilateral trade and investment.

Experts point out that the acceleration of RMB internationalization will provide better service for domestic and foreign businesses and residents. It will help companies to avoid exchange rate risks and reduce trading costs and will be convenient for people traveling abroad. Meanwhile, from the perspective of national strategy, RMB internationalization will help reduce China’s huge foreign exchange reserves and enhance the autonomy of monetary policies.

This article is edited and translated from 《人民币国际化提挡再加速》，source: People’s Daily, author: Xiao Weiguang.