Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks

Hector Perez-Saiz and Longmei Zhang

No 2023/077, IMF Working Papers from International Monetary Fund

Abstract: The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. However, it also reflects the impact of policy measures by the People’s Bank of China, including establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. Our analysis contributes to a better understanding of the growing importance of RMB within the international monetary system.

Keywords: RMB internationalization; Swift; Swap lines; Offshore Clearing Banks; liquidity shortage; RMB payment; renminbi usage; usage of the renminbi; Offshore financial centers; Currencies; Capital account; Reserve currencies; International monetary system; Global (search for similar items in EconPapers)
Pages: 24
Date: 2023-03-31
New Economics Papers: this item is included in nep-ban, nep-cna, nep-int, nep-mon and nep-pay
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Citations: View citations in EconPapers (2)

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