BRI acts as catalyst for yuan to internationalize
Print Edition
The Belt and Road Initiative has placed the yuan on a stable path toward internationalization, according to a new report.
“The world’s largest economic corridor is expected to expedite the use of yuan for trade, financing and investment,” said the report jointly prepared by The Asian Banker and China Construction Bank.
The report covered several areas, including the rate of internationalization, initiatives influencing internationalization, industry sentiment, yuan-denominated financial assets held abroad, and foreign yuan bond-holding.
It showed the pace of yuan internalization picked up in 2017 with the BRI’s promising potential, according to the report based on a survey of 398 Chinese and overseas enterprises and financial institutions.
When asked what factors had had the maximum impact on yuan internationalization, 72 percent of respondents, including 80 percent of Chinese corporations, voted for the BRI.
China expects its annual trade with countries along the Belt and Road route to surpass US$2.5 trillion within the next decade.
Other key initiatives driving yuan internationalization include the inclusion of the yuan into the Special Drawing Rights currency basket by the International Monetary Fund and policies to further open the market released by Chinese regulators.
The SDR inclusion marked not only a vote of confidence in the yuan as an international currency but also solidified China’s commitment to financial liberalization, according the report.
Chinese corporations are optimistic about increased yuan engagement in 2018, particularly in the areas of trade settlement, offshore deposits, payments and forex transactions.
About 63 percent of Chinese companies, 47 percent of overseas corporations and 57 percent of financial institutions plan to increase their yuan cross-border engagement this year.
In 2017, the internationalization of the yuan continued to progress and its status as an emerging international currency was further consolidated.
At the end of 2017, total yuan-denominated financial assets held by foreign institutions and individuals amounted to 4.28 trillion yuan (US$630 billion), up 41.3 percent year on year.
Foreign institutions raised yuan bond holdings by 347.7 billion yuan, and total outstanding yuan bonds held by foreign institutions at the year-end reached a record high level of 1.15 trillion yuan.
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