China's yuan is a growing force in global finance, more than doubling in use over the past year, according to a new study from the Institute of International Finance (IIF).
Although its use in the international payments system remains dwarfed by the dollar and euro, the yuan, officially known as the renminbi, grew to 1.4 per cent of total transactions.
That jump moved it ahead of the Hong Kong and Singapore dollars and even with the Swiss franc, the sixth most used currency in global transactions, the IIF study said.
In trade finance, overwhelmingly dominated by the US dollar, the yuan jumped into second place last year ahead of the euro and the Japanese yen, comprising eight per cent of transactions.
And despite Beijing's still firm controls on its use, the yuan has become the ninth most-traded currency on foreign exchange markets, the volume hitting $US120 billion ($A129 billion) daily on average, compared with $US34 billion in 2010.
The study by the IIF, a global association of leading banks, said the gains have come as Beijing slowly frees up the currency for international use.
There are clearing banks for yuan transactions now in five international centres: Hong Kong, Macau, Taiwan, Singapore and, since early this year, London, the world's leading foreign exchange centre.
Yuan-denominated bonds, so-called dim-sum bonds, have jumped since the government first permitted their issue in Hong Kong seven years ago.
"While true internationalisation would require much greater capital account liberalisation, the Chinese government continues to take measured steps towards opening China's financial markets."
"Further gradual steps to widen the currency trading band - and a more market-determined exchange rate - will help this process," the IIF said.
Share
