RMB: From 'Going Out' to 'Staying Put' - International Finance Observer (Sept 30)

Recently, the People's Bank of China released its "2026 RMB Internationalization Report," disclosing a set of impressive figures: in 2025, banks' RMB cross-border receipts and payments on behalf of clients totaled 70.6 trillion yuan, up 10.1% year on year; in January-June 2026, the figure reached 42.4 trillion yuan, up 21.4% year on year.

Today, the RMB has become China's largest settlement currency for external receipts and payments, the world's second-largest trade finance currency, third-largest payment currency and fifth-largest FX trading currency, and ranks third globally by weight in the IMF's Special Drawing Rights (SDR) currency basket.

Continued expansion in scale is certainly welcome, but beneath the aggregate figures a more noteworthy structural change is emerging: RMB internationalization is gradually shifting from "going out" to "staying put."

For a long time, our understanding of RMB internationalization focused on opening up channels for external circulation. In 2025, RMB cross-border receipts and payments under the current account reached 17.9 trillion yuan, accounting for 31.3% of total local- and foreign-currency cross-border current account receipts and payments in the same period; in the first half of 2026 that share rose further to 31.7%. Nearly one third of cross-border transactions under the current account — trade in goods, trade in services and more — can be settled directly in RMB, genuinely helping market participants save exchange conversion costs and mitigate exchange rate risk, and building the most solid foundation for cross-border RMB use.

At the same time, infrastructure such as clearing banks and the Cross-Border Interbank Payment System (CIPS) keeps expanding: as of the end of June 2026, RMB clearing banks covered 36 countries and regions, totaling 41; CIPS direct participants increased to 210 and indirect participants to 1,619, with business reaching more than 5,200 corporate banks in 192 countries and regions. Both the "roads" and the "networks" for cross-border RMB use are expanding.

Of course, opening the roads is only the starting point. The true quality of currency internationalization ultimately depends on whether the money flowing abroad can form a closed loop. In this respect, changes in cross-border financing are the most telling. Against the backdrop of an overall decline in the total cross-border financing balance, the RMB financing balance moved higher against the trend, with its share rising from 47.8% at the end of June 2025 to 62% at the end of June 2026.

Breaking this down, the outstanding RMB loans extended abroad by domestic banks have exceeded 1.44 trillion yuan, accounting for 50.7% of the outstanding local- and foreign-currency loans abroad. Coupled with domestic enterprises' outward lending and the nationwide rollout of integrated local- and foreign-currency cash pools for multinational companies, channels for real-economy companies to collect cross-border funds and extend loans abroad have been further opened up. In 2025, nationwide cross-border RMB cash pool receipts and payments totaled 5.8 trillion yuan; in the first half of 2026 they reached 2.8 trillion yuan, with receipts and payments broadly balanced. This means the RMB's role is extending further from a trade settlement tool to a cross-border financing currency.

The expansion of Hong Kong's RMB business facility is precisely the key lever in this transition: from an initial 100 billion yuan focused on short-term trade finance, it has been expanded to 500 billion yuan, with the maximum term extended to three years and the use of funds broadened to cover direct investment and operations by domestic and overseas enterprises, capital expenditure and working capital loans. At the same time, the Hong Kong Monetary Authority removed the additional premium, bringing financing costs in line with the onshore market, so that the offshore market gains a more stable supply of RMB liquidity.

Once liquidity supply is in place, the next core question follows: does the RMB flowing overseas have sufficient and diversified assets to be allocated into?

As of the end of June 2026, domestic stocks, bonds, loans and deposits held by overseas entities totaled about 11.3 trillion yuan, up from about 10.4 trillion yuan at the end of June 2025.

However, data on overseas holdings of RMB assets should not be interpreted simplistically. Although the total scale of domestic stocks, bonds, loans and deposits held by overseas entities has risen somewhat, the structural divergence is stark: the balance of domestic bonds held by overseas entities fell from about 4.28 trillion yuan to about 3.23 trillion yuan, while balances of stocks, loans and deposits all increased. In addition, the stock holding balance is also disturbed by market price fluctuations and cannot be equated directly with net capital inflows.

Compared with fluctuations in existing holdings, changes on the supply side are more indicative. Panda bond issuance has remained brisk, with about 183.06 billion yuan issued in 2025 and already 160.03 billion yuan in the first half of 2026; over the same period, offshore RMB bond issuance reached 896.1 billion yuan, up 94.4% year on year; the offshore RMB credit market has also kept expanding, with the outstanding RMB loan balance in major offshore markets reaching 1.2 trillion yuan at the end of June 2026.

This shows that the market is actively creating RMB-denominated investment and financing products, and overseas entities can not only hold RMB assets but also actively issue RMB bonds for financing.

A new outline of the capital cycle thus emerges: trade settlement exports RMB, cross-border financing takes in RMB funds, and the stock, bond and credit markets provide vehicles for asset allocation — while asset allocation activity in turn generates new settlement and financing demand.

If the first half of RMB internationalization was about solving "how the RMB goes out," then the core task of the second half is to build a sound asset ecosystem and solve the problem of "how it settles and circulates once it is out."

Of course, we must also clearly recognize that this process cannot be accomplished overnight. The dollar has long occupied an important position in the international monetary system, backed not only by the United States' enormous economic and trade scale but also by deep, highly liquid financial markets, rich risk-hedging products and a mature global payment and clearing system.

This also reminds us that in judging the progress of RMB internationalization, we should not fixate solely on the scale of cross-border receipts and payments, nor only on how many clearing banks have been added. The more important benchmark is whether overseas market participants are willing to hold RMB for the long term, use RMB for financing, and keep allocating into RMB assets.

In the next step, institutional development and market cultivation must advance in parallel. On one hand, we should continue to solidify the institutional foundation for cross-border RMB use, steadily advance two-way opening of the financial market, and continue to cultivate the offshore RMB market; on the other hand, we should give full play to the functional advantages of the Shanghai International Financial Center, the Hong Kong International Financial Center and the offshore RMB hub.

RMB internationalization is not about pursuing simple scale figures. Only by building a complete and sustainable currency circulation can the international use of the RMB go deeper and circulate more steadily.

(Source: International Finance News)