Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks
IMF Working Papers, March 31, 2023
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- Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks
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Bibliographic details
- Authors: Hector Perez-Saiz, Longmei Zhang
- Published: March 31, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400235559.001
Overview and data
- Paper examines the usage of the Renminbi (RMB) as an international payment currency.
- Global usage: RMB accounts for 2 percent of total cross-border transactions.
- Data source: country-level transaction data from Swift for 2010–21.
Key findings
- Significant regional variations exist in the use of RMB for cross-border payments.
- Cross-country differences in RMB usage have widened over the years covered (2010–21).
- Factors explaining cross-country differences:
- Geographic distance.
- Political distance.
- Trade linkages with China.
- Policy measures by the People’s Bank of China influenced offshore RMB usage:
- Establishing bilateral swap lines.
- Establishing offshore clearing banks.
- Both swap lines and offshore clearing banks helped address offshore RMB liquidity shortages given China’s overall capital account restrictions.
- Offshore clearing banks had a quantitatively larger impact than bilateral swap lines.
- The analysis contributes to understanding the growing importance of RMB within the international monetary system.
Policy implications and interpretation
- Addressing offshore RMB liquidity shortages via institutional arrangements (swap lines and offshore clearing banks) can increase RMB usage in cross-border payments where capital account restrictions limit direct market liquidity.
- Offshore clearing banks appear to be the more effective policy instrument, in quantitative terms, for expanding RMB payment usage offshore.
Publication and metadata
- Authors: Hector Perez-Saiz, Longmei Zhang
- Publication date: March 31, 2023
- Publication series: IMF Working Papers
- Pages: 24
- Volume: 2023
- Issue: 077
- Series: Working Paper No. 2023/077
- DOI: https://doi.org/10.5089/9798400235559.001
- Stock No: WPIEA2023077
- ISBN: 9798400235559
- ISSN: 1018-5941
- Subjects: Balance of payments; Capital account; Currencies; Financial services; International monetary system; Money; Offshore financial centers; Reserve currencies
- Keywords: Capital account; Currencies; Global; International monetary system; liquidity shortage; Offshore Clearing Banks; Offshore financial centers; renminbi usage; Reserve currencies; RMB internationalization; RMB payment; Swap lines; Swift; usage of the renminbi
Source: Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks (IMF Working Papers, March 31, 2023).
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- Working Paper