Seizing Opportunities in RMB Internationalization Banks Enhance Cross-Border Service Capabilities

    Recently, the China Banking Association released the “RMB Internationalization Report (2024-2025)” (hereinafter referred to as the “Report”), which indicates that the internationalization of the RMB has steadily advanced in recent years, providing ample opportunities for the banking sector to develop cross-border RMB business.

    According to interviews conducted by China Business News reporters, the continuous progress of RMB internationalization has brought business opportunities for banks in areas such as cross-border RMB settlement and trade financing. Banks should act in accordance with the trend and seize these opportunities.

    The World's Fourth-Largest Payment Currency

    The Report indicates that cross-border RMB business has maintained rapid growth, further enhancing the renminbi's global payment functionality. According to official data, the total value of cross-border RMB receipts and payments nationwide reached 52.3 trillion yuan in 2023 and 64.1 trillion yuan in 2024, with year-on-year growth rates exceeding 20% in both years. The Cross-border Interbank Payment System (CIPS) processed a cumulative cross-border payment volume of 175.5 trillion yuan in 2024, a year-on-year increase of 42.6%. In November 2023, the renminbi became the world's fourth-largest payment currency and maintained this position at the end of 2024. Additionally, offshore markets such as Hong Kong, London, and Singapore have seen rapid growth in renminbi foreign exchange trading and payment clearing volumes.

    Simultaneously, the renminbi's global trade financing status has surged. The Report indicates that according to official disclosures, by the end of 2024, the renminbi had become the world's third-largest trade financing currency, trailing only the US dollar and the euro. Furthermore, the renminbi demonstrated both volume and quality growth in securities markets. The trading volume of the Stock Connect and Bond Connect programs reached new highs, while the Cross-Border Interbank Bond Market (CIBM) and Qualified Foreign Institutional Investor (QFII) mechanisms continued to be optimized. By the end of 2024, foreign institutions and individuals held RMB assets totaling 7.12 trillion yuan in stocks and bonds, a year-on-year increase of 9.4%.

    Yang Haiping, a special researcher at the Beijing Wealth Management Industry Association, told reporters that the renminbi's internationalization process requires further optimization in the following areas: First, focusing on the long-term to enhance the openness of China's financial markets, boost the appeal of Chinese financial assets and markets, and facilitate channels for offshore renminbi to flow back into China. Second, upgrade mutual access mechanisms to reinforce Hong Kong's status as an offshore RMB center. Third, prioritize the Belt and Road Initiative to enhance RMB's direct investment functionality. Fourth, seize critical windows of opportunity to advance RMB integration with key assets, scenarios, markets, and applications. Fifth, continuously improve cross-border RMB usage infrastructure.

    Banks Expand Cross-Border Financial Services Across Multiple Dimensions

    The advancement of RMB internationalization and the vibrancy of China's foreign trade have opened vast opportunities for banks to develop cross-border RMB business. With the deepening implementation of the Belt and Road Initiative, the gradual maturation of offshore RMB markets, and the continuous expansion of the global RMB clearing service network, financial “going global” channels are becoming increasingly sophisticated. Banks' strategies for promoting cross-border RMB usage are growing richer and expanding in scope.

    A banking professional in North China stated: “Currently, China's commercial banks possess relatively comprehensive service systems and solutions in areas such as agency settlement, trade financing, financial markets, and asset management, providing solid support for cross-border RMB operations. However, in terms of product and service capabilities, some commercial banks still need to advance their internationalization to meet clients' diverse needs and ensure the effectiveness of their offerings.”

    Yang Haiping informed reporters that the ongoing advancement of RMB internationalization presents commercial banks with business opportunities in cross-border RMB payments, cross-border RMB settlements, and trade financing. Simultaneously, it indirectly creates more opportunities for commercial banks to serve enterprises expanding overseas. Furthermore, RMB internationalization imposes higher demands on commercial banks' cross-border service capabilities, risk prevention and control capabilities, and compliance management capabilities.

    As key participants in RMB internationalization, banks should seize the momentum and opportunities to further play their role in market development and promotion. The Report proposes three recommendations:

    First, further refine policies facilitating cross-border RMB transactions. Appropriately coordinate domestic and foreign currency cross-border policy requirements, clarify the format or content of payment and collection instructions for enterprises conducting cross-border RMB settlement under trade items, increase the update frequency of the “List of High-Quality Enterprises for Cross-Border RMB Settlement,” and support banks in classifying clients under cross-border RMB business for management purposes, provided risks are controllable.

    Second, optimize the management mechanisms for key business areas in RMB internationalization. Appropriately broaden the scope and eligibility criteria for integrated RMB-foreign currency cash pooling pilots, and further expand the types of assets and geographic regions covered by two-way cross-border RMB asset transfers.

    Third, continuously enhance the development of the offshore RMB market. Enrich offshore RMB investment and risk hedging instruments, increase the upper limit for cross-border interbank financing, formulate differentiated regulatory policies for offshore RMB lending, and promote the establishment of direct exchange mechanisms between RMB and more minor currencies.