RMB third biggest currency in trade finance
The Chinese renminbi is the world’s third biggest currency in global issuance of letters of credit, according to financial messaging service Swift.
Perhaps more important than the renminbi’s steady rise as global payments currency – now standing at 16th most-used payment currency, according to Swift’s monthly RMB tracker – is the Chinese currency’s rising prominence for trade finance. “The renminbi now has a 4% market share in the global issuance of letters of credit by value,” says Wim Raymaekers, head of banking markets at Swift. “This makes it one of the world’s top-three currencies in this space – it’s quite an Olympic achievement.”
The US dollar remains by far the dominant currency for this type of trade finance, with an 84% market share, but it is noteworthy that the Chinese renminbi outpaces the Japanese yen (1.9%) and is not far behind the euro (7%) by overall value of transactions.
RMB is 3rd biggest currency in global
Swift’s data show that the use of renminbi for the issuance of letters of credit is concentrated heavily in Asia. Well over 50% of all letters of credit in transaction value were sent by banks in China to Hong Kong, with nearly 20% going from China to Singapore.
Letters of credit denominated in renminbi between China and EMEA account for just over 4% of all transactions by value, and for the Americas this figure is closer to 2%.
|Top RMB corridors for lettters of credit|