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E-mail China.org.cn, February 28, 2025
21st Century Business Herald:
What steps will the PBC take next to further enhance the international monetary functions of the RMB in areas such as cross-border payments, investment and financing?
Xuan Changneng:
Thank you. I'll take this question. In recent years, with the accelerated diversification of the international monetary system, the inherent demand among economic entities to use the RMB for trade settlement, investment and financing has been steadily increasing. Since the international financial crisis in particular, this demand has been continuously strengthening. The PBC has responded to market demand by swiftly implementing a series of measures to facilitate cross-border RMB usage, providing economic entities with more currency options for cross-border trade and investment settlements, thereby better supporting the real economy. These measures have several features: First, the policies are much better. In collaboration with SAFE, we continued to optimize fund management policies for domestic and foreign currency cash pools, overseas lending of domestic enterprises through commercial banks, and overseas listings of domestic enterprises, thereby enhancing the convenience of cross-border RMB usage. Second, the level of openness is higher. We have successively launched policy arrangements such as introducing the Cross-boundary Wealth Management Connect scheme in the Guangdong-Hong Kong-Macao Greater Bay Area and establishing multi-functional free trade account systems in Hainan and Hengqin. We have also improved policies for qualified foreign investors and actively promoted institutional opening-up. Third, the operation is more convenient. We continued to guide and promote commercial banks to optimize cross-border RMB business processes, improve transaction handling efficiency, and enhance service levels. Fourth, the network has been further improved. We continuously expanded the network of RMB clearing banks, increasing the number of participants and coverage areas of the RMB Cross-Border Interbank Payment System (CIPS), and providing fundamental support for cross-border use of RMB.
Overall, with the joint efforts of all parties, various indicators of RMB international use have steadily improved, and the capacity of cross-border RMB business to serve the real economy has continued to strengthen. In terms of payment functionality, the RMB has now become the world's fourth most actively used payment currency. Last year, the amount of cross-border RMB receipts and payments reached approximately 64 trillion yuan, a year-on-year increase of 23%. In terms of financing, the RMB has become one of the top three currencies for global trade financing. In 2024, foreign financial institutions and enterprises issued nearly 200 billion yuan in panda bonds in China, marking a year-on-year increase of 32%, while the issuance of offshore RMB bonds surged by 150% year on year. In terms of its reserve function, the RMB has been included in the foreign exchange reserves of over 80 foreign central banks or monetary authorities. In the offshore RMB market, the balance of RMB deposits in Hong Kong exceeds 1 trillion yuan, while the balance of RMB loans is close to 700 billion yuan, both reaching historic highs.
In the next stage, the PBC will continue to adhere to the principles of being market-driven and achieving mutual benefits, balancing development and security, and creating a more favorable environment for domestic and international entities to hold and use the RMB. First, we will strengthen coordination between domestic and foreign currencies, further improve policies for cross-border use of RMB, and enhance the convenience of handling cross-border RMB transactions. Second, we will support investment and liquidity management in RMB, increase risk-hedging tools, and support Shanghai's efforts to establish itself as a center for RMB financial asset allocation and risk management. Third, we will facilitate business entities in conducting cross-border financing activities in RMB, supporting RMB trade financing, overseas loans and RMB bond issuance. Fourth, we will improve the supply mechanism of offshore RMB liquidity, support the healthy development of the offshore RMB market, and enhance Hong Kong's status as both an international financial center and an offshore RMB business hub. Fifth, we will improve the infrastructure arrangements for the use of RMB in cross-border transactions, establish new RMB settlement banks in a reasonable manner, and continuously enhance the functions and services of the RMB cross-border payment system.
That's all from me. Thank you.
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