BOFIT Weekly Review 2015/41
Yuan surpasses yen as the world’s fourth-most-used currency in international payments
SWIFT, the Brussels-based provider of global financial communications services, reports that in August the Chinese yuan accounted for 2.8 % of the value of international payments, putting it ahead of the Japanese yen for the first time as the world’s number-four payments currency. Given the slim margin of difference in valuations of yuan and yen transactions, the ranking could shift back and forth in coming months. Nevertheless, China’s growth prospects and the increasing interest in adopting the yuan point out to yuan establishing its position. Still ahead of the yuan in international use are the British pound (8 % of international payments), the euro (27 %) and the US dollar (45 %).
The rise of the yuan’s use in international payments has been rapid. In just the past three years, it has overtaken seven currencies used in international payments. The yuan is now the most-used currency in Asia Pacific for payments with China and Hong Kong.
Development of China’s market infrastructure has also helped support wider acceptance of the yuan. As a latest measure, this week the People’s Bank of China announced that the new China International Payments System (CIPS) was now operational. The system facilitates international yuan clearing for businesses.