Yuan tipped to become top-3 global trade currency by 2015


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Mar 24, 2009
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The Chinese yuan may become one of the top-three global trade currencies by 2015, according to a private report released yesterday.

More than 70 percent of the companies - amounting to 500-plus firms worldwide - surveyed by HSBC said they are willing to expand the usage of the yuan for their cross-border businesses in the next five years. And almost half of them believed they have sufficient knowledge of yuan internationalization.

"The new measures introduced by the People's Bank of China recently will have a big positive impact on deepening yuan internationalization," HSBC China said in the report.

"According to the survey, 42 percent of our corporate clients said the complexity of cross-border yuan transaction was one of the challenges they faced. But the new measures will ease those worries and boost the willingness to use the currency. We firmly believe that the yuan will join the ranks of top-three currencies for cross-border trade settlement by 2015," it said.

The survey also noted higher recognition of the currency in China's Hong Kong and the United Kingdom than the other four overseas markets monitored by HSBC, namely Singapore, Australia, Germany, and the United States.

In Hong Kong, 72 percent of companies said they were aware of the benefits of using the yuan for trade settlement, while the proportion in the UK was 57 percent. Meanwhile, Singapore and Australia had a lower recognition after the US and Germany.

The results were drawn from a survey of more than 700 enterprises worldwide.

Frankie Au, head of yuan products of transaction banking at Standard Chartered Bank for Asia, said earlier that the PBOC is shifting the cross-border yuan business from the pilot stage to mainstream operations.

"The simplified documentation and shortened payment process will allow more companies to enjoy efficient liquidity management and inter-corporation lending," he said.

After the Chinese yuan joins the ranks of international trade currencies, many analysts expect it to go on to become a global investment currency.

There's a need to develop other avenues to replenish the offshore yuan liquidity pool, which requires the mainland to shift the focus of its yuan reforms from current account to capital account convertibility, DBS Bank said last week.


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