Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swap Lines and Offshore Clearing Banks

​​​​This study group will discuss the use of Renminbi (RMB) as an international payment currency. Despite China’s growing economic weight and close trade ties with the rest of the world, its financial integration remains limited, reflecting capital account restrictions. In this context, the international use of the RMB is minimal across multiple dimensions, including as a reserve currency, a payment currency, and a pricing currency. On the payment front, the RMB accounts for approximately  2 percent of cross-border transactions worldwide. However, the global aggregate masks significant regional variations. Based on country-level SWIFT transaction data,  this study group will examine the regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. In addition, it reflects the impact of policy measures by the People’s Bank of China, such as establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. The regional divergence in RMB usage, if it continues, will have profound implications for the future landscape of the international monetary system. 

Working paper: ​​Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swap Lines and Offshore Clearing Banks

This study group / discussion is open to all. Registration is not necessary.
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