Rise of the renminbi
China is expanding the yuan's profile beyond its borders, part of a broader strategy for gaining greater clout in international, political and economic affairs.
Updated: 28 October 2014
Chronology
A steady stream of policy initiatives have pushed the yuan further along the path to internationalisation, creating a thriving offshore RMB market. Hong Kong remains the main offshore yuan hub.
Loosening the leash
China unpegged the yuan from the dollar in 2005 and moved to a managed float, based on a basket of currencies. The central bank has since loosened its grip further by expanding the daily trading range, adding teeth to a promise it would allow market forces to play a greater role in the economy and its markets.
A different view of the band. The chart below shows where the yuan traded in relation to the guidance rate.
Trade settlement
Amount settled in RMB
China used trade settlement as a way to gradually internationalise the currency. Exporters and importers in a number of Chinese cities and regions are now allowed to use yuan for settling trade with other countries.
Amount settled in RMB
Appetite for dim sum
Volume issued
China's offshore yuan bond market has come a long way in recent years. Once limited to only blue-chip Chinese companies and banks, now any issuer can raise money in the market. The "dim sum" market as it is popularly known, took off in July 2010 after China liberalised trade settlement and has since expanded its footprint with issues in Frankfurt and London.
Volume issued
Swap lines
Since 2008, the Chinese authorities have signed currency swap agreements with 26 central banks for a total of more than RMB 2.7 trillion. This promotes usage of the yuan in global commercial and financial transactions, with the ultimate goal of rivalling the dollar as a reserve currency.
Sources: ThomsonReuters: Hong Kong Monetary Authority
Graphic by Simon Scarr, Jane Pong