China continues its path towards the internationalization of the yuan, according to its central bank, with newly announced efforts aimed to boost its reserve status.
The People’s Bank of China underlined in the «2020 RMB Internationalization» report that greater yuan adoption will be dependent on a future driven by market-oriented dynamics.
It highlighted several areas in particular: greater liberalization of allowed usage; more opening and connection to domestic markets; continued guidance of the offshore yuan; and prudential management with risk-based adjustments where necessary.
Planning is underway for pilot programs aimed at boosting yuan-denominated trade and investments with expectations, for example, of more foreign trader participation in crude oil, iron ore and other commodity futures.
New Records
Last year before the full blowout of the coronavirus pandemic, cross-border yuan settlement reached a record-high of 19.67 trillion yuan ($2.83 trillion), according to a report, 24 percent year-on-year increase that made it the fifth-largest payment currency worldwide.
The yuan’s share in global foreign exchange reserves also reached a record-high of 2.02 percent.
As of 2019-end, the PBoC set up clearing banks in 25 countries while more than 70 central banks and monetary authorities globally have incorporated the yuan in their foreign exchange reserves.
