New | Yuan's share in global payments hits record high
The Chinese currency's 2.18 per cent of global share is gradually moving closer to challenge Japanese yen, which accounted for 2.6 per cent in world's payments by value last month
The yuan's share in world payments hit a record high last month as Beijing continued to relax its capital controls to boost the currency's global use.
The yuan accounted for 2.18 per cent of global payments by value, according to data tracked by Swift, the world's largest interbank messaging network to help settle transactions.
While payments by all currencies dropped 3.1 per cent, those settled in the Chinese currency rose 1.99 per cent from April.
The yuan remains the world's fifth-biggest payment currency, after the US dollar, euro, pound sterling and Japanese yen. The dollar's share of global payments is 45 per cent, followed by the euro's 28 per cent and pound sterling's 7.9 per cent.
The yuan's share has been inching up and is now approaching a point where it can soon challenge the yen, which accounted for 2.6 per cent of the global payment pie last month.
"Every month, we witness new proof of global [yuan] adoption," said Michael Moon, the Asia-Pacific head of payments at Swift. "The number of banks that use [yuan] for payments with [mainland] China and Hong Kong is a key internationalisation indicator.
"This large number also shows many banks across the globe may have an interest in connectivity to the China International Payment System that China will launch by the end of the year."
Last month, 1,081 financial institutions used the yuan for payments with mainland China and Hong Kong. Of the institutions, 526 are based in Asia, according to Swift.
The 1,081 institutions, which account for 35 per cent of banks globally tracked by Swift, are substantially more than the 888 institutions which used the yuan two years ago.
The Americas region experienced the strongest growth, with financial institutions increasing their use of the yuan. Two years ago, only 87 banks there were settling payments in yuan. That increased to 114 last month, accounting for 37 per cent of banks in the region tracked by Swift.
"Swift's data makes it clear that [the yuan] is becoming increasingly central to the business that banks do with [mainland] China and Hong Kong," said Surendra Rosha, HSBC's head of financial institutions group for Asia-Pacific.
"As opportunities grow for banks' clients to use [yuan] in trade with China and to invest in its markets, we would expect financial institutions' use of the currency to carry on increasing."
