Central Bank: Consistent and prudent promotion of RMB internationalization to promote a virtuous circle of onshore and offshore RMB markets

On September 23, the People’s Bank of China released the 2022 RMB Internationalization Report, stating that since 2021, the People’s Bank of China has adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and firmly implemented the decisions. and the arrangements of the CPC Central Committee and the State Council Fully implement the new development concept, adhere to reform and opening up and mutually beneficial and win-win results, and prudently proceed with the internationalization of the RMB in based on the independent choice of market driven enterprises, in order to provide strong support to the stable operation of the real economy. All indicators of RMB internationalization are generally improving, the function of RMB as a payment currency has been gradually improved, the investment and financing function of currency has been further deepened, the function of reserve currency has been continuously improved , and the nominal currency function has been gradually improved.

Since 2021, the amount of RMB cross-border receipts and payments has continued to grow on the basis of the previous year’s high base. In 2021, the total amount of cross-border RMB receipts and payments by banks on behalf of customers will reach 36.6 trillion yuan, a year-on-year increase of 29.0%, and the amount of receipts and payments will reach an all-time high. Overall, cross-border RMB receipts and payments were balanced, with a cumulative net inflow of 404.47 billion yuan throughout the year. According to data from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the share of RMB international payments will increase to 2.7% in December 2021, surpassing the Japanese yen as the world’s fourth payment currency, and will increasing further to 3.2% in January 2022, the highest level ever. According to the Composition of Official Foreign Exchange Reserves (COFER) data released by the International Monetary Fund (IMF), in the first quarter of 2022, the RMB accounted for 2.88% of global foreign exchange reserves , which is higher than when the RMB joined the Special Drawing Rights (SDR) in 2016. ) rose 1.8 percentage points in the currency basket, becoming fifth among the major reserves. In May 2022, the International Monetary Fund (IMF) raised the weight of the renminbi in the special drawing rights (SDR) from 10.92% to 12.28%, reflecting the recognition of the increasing free use of the renminbi.

The number of cross-border RMB settlements related to the real economy maintained rapid growth, and areas such as bulk goods and cross-border e-commerce became new growth points, and cross-border two-way investment activities continued to be active. In general, the RMB exchange rate has shown a two-way fluctuation tendency, and the endogenous demand of market players to use RMB to avoid exchange rate risks has gradually increased. Basic systems such as RMB cross-border investment and financing, transaction settlement, etc. have been continuously improved, and the ability to serve the real economy has been continuously improved.

my country’s financial market continues to open, RMB assets remain very attractive to global investors, and cross-border RMB receipts and payments under securities investment generally show a net inflow. At the end of 2021, the total financial assets such as domestic RMB stocks, bonds, loans and deposits held by foreign entities totaled 10.83 trillion yuan, a year-on-year increase of 20.5%. The offshore RMB market has gradually improved and transactions have become more active. By the end of 2021, RMB deposits in major offshore markets were close to 1.50 trillion yuan.

In the next step, the People’s Bank of China will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, firmly implement the decisions and arrangements of the CPC Central Committee and the State Council, coordinate development and security, and proceed steadily and prudently on the basis of market-driven independent choice of RMB internationalization initiatives. Further consolidate the basic institutional arrangements for the cross-border use of RMB, meet the needs of the real sector for the use of RMB, promote the two-way opening of the financial market at a higher level, and promote a virtuous circle of RMB onshore and offshore markets . At the same time, we will continue to improve the macro-prudential management framework for cross-border capital flows that integrates domestic and foreign currencies, establish and improve the monitoring, assessment and early warning system for cross-border capital flows, and maintain firmly. bottom line no systemic risks.

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