Over 30 central banks include RMB in forex reserves

Want China Times, CNA 2014-11-30

Hu Xiaolian. (File photo/Xinhua)

More than 30 central banks in the world have included the renminbi in their foreign exchange reserves, indicating that the currency is gaining importance in the global market, according to China's state-run Economic Daily.

Hu Xiaolian, deputy governor of the People's Bank of China (PBOC), was cited by the report as saying that after China's efforts to boost the global visibility of the renminbi, more than 30 central banks in the world had made the currency part of their forex portfolios as of the end of October, while a total of 28 central banks have signed bilateral currency swap agreements with the PBOC.

Due to the closer ties with other central banks in the world, the trading volume through currency swaps has topped 3 trillion yuan (US$489 billion), Hu said.

Hu added that 169 offshore institutions had participated in renminbi trading through the China banking system as of the end of October.

Sixteen Chinese financial institutions issued 105.5 billion yuan (US$17.2 billion) worth of bonds overseas, while foreign enterprises had sold 500 million yuan (US$81.4 million) in bonds in the China market, Hu said.

Amid the PBOC's renminbi globalization efforts, Hu said that the bank had signed agreements with 12 of its counterparts in the world in the renminbi clearing settlements as of the end of October.

Taiwan is one of the 12 countries or regions to sign an agreement to set up a renminbi clearing mechanism. The cross-strait agreement was signed in late August 2012 before the local central bank lifted a ban to allow banks in Taiwan to conduct renminbi-denominated transactions, including deposits, lending and remittances, in February 2013.

In October, renminbi-dominated remittances through the Taiwan banking system hit a new high of 200.4 billion yuan (US$32.6 billion), up more than 62% from a month earlier, as Taiwanese investors rushed to send their renminbi overseas in preparation for the Shanghai-Hong Kong Stock Connect trading platform, which kicked off Nov. 17.

While building closer ties with China, Taiwan is gearing up to transform itself into an offshore renminbi trading hub.

The paper cited Hu as saying that the PBOC has stopped its regular intervention in the Chinese foreign exchange market, so the renminbi has been moving in a larger range, either upward or downward, against the US dollar.

She said that the PBOC is determined to push for financial liberalization in a bid to allow the renminbi and domestic interest rates to fluctuate based on market conditions.

Related Articles:

How China is reshaping global development finance

Debate over monetary system grows