Yuan the 4th most-used payment currency
According to the global transaction services organisation SWIFT, China's Yuan became the fourth most-used world payment currency by overtaking Japanese yen in August. Currently, Yuan is only after the "US dollar, the euro and the sterling" as a payment currency. The payments for Yuan increased in value by 9.13% while the other currencies decreased by 8.3%.
In 2013, China started seeking a larger role for its money in global trade and investment and China loosened controls on the "exchange rate and borrowing costs" to make that happen. Agreements were advertised in China regarding "the start of direct currency trading" amongst yuan, British pound and Singapore dollar. Moreover, the opening of Chinese capital markets was leading to its larger international circulation.
The Canadian dollar was overtaken by yuan to rank fifth for use in global payments. This jump bolstered its case for becoming a reserve currency with the International Monetary Fund. More than 50 global banks have already held yuan as a reserve currency further strengthening its case. The dollar and euro remained the two most used currencies, followed by the pound and Japan's yen.
The reason behind Yuan's climb as a payment currency has been due to the narrowed gap between its onshore and offshore prices. This narrowing of the gap has been mostly because of the recent foreign exchange reforms implemented by China's central bank. Chinese efforts to check capital outflows and gain confidence in 'stable foreign exchange rates' eased investor concerns making Yuan flourish
The Renminbi overtook seven currencies during the last 3 years reaching a record high share of 2.79% in global payments in August 2015. Within the last year, over 1,700 financial institutions advanced worldwide payments in RMB, marking a 14% rise compared to 2014. Previously the Renminbi (Yuan/RMB) was ranked number 12 with a share of 0.84% as a world payment currency in 2012.
The Yuan was most used in Singapore (24.4%) followed by the United Kingdom (21.6%).