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Navigate the RMB


THE NEW CURRENCY OF TRADE

RMB internationalisation is an integral part of China’s financial reforms, with gradual liberalisation of the current account since 2009 and growing use of RMB in China’s cross-border trade. This ongoing growth presents a number of benefits when using the RMB as an invoicing and settlement currency.

THE GROWING USE OF RMB IN CHINA’S CROSS-BORDER TRADE

RMB RANKING AS A GLOBAL PAYMENT CURRENCY

BENEFITS OF USING RMB FOR BUYERS AND SELLERS

1. OPEN & CONVERTIBLE

The current account is fully open and convertible so there are no restrictions on converting RMB for legitimate cross-border trade

2. SIMPLE

Settling trade transactions and making payments in RMB is as simple as other currencies - it shouldn’t be viewed as more complex

3. PRODUCT SUITE

A full suite of trade and supply chain solutions are available to assist with a shift to RMB invoicing and settlement and help with managing working capital

4. MUTUAL BENEFIT

A number of benefits can accrue to both buyer and seller including price advantages, improved foreign exchange risk management, working capital improvement and access to a potentially broader supply chain

Contact your Relationship Manager for the full report.

RELATED ARTICLES


Financing Solutions

The growing use of RMB worldwide is creating new trade, investment and financing opportunities for companies doing business with or in China. As a result of these RMB flows, companies have an increasing need both onshore and offshore to raise RMB funding to finance their working capital requirements, capital expenditure and new project developments. To satisfy these needs, as well as those of the global investor community, China’s onshore financing market will gradually transition from being a “loans based” market to a more “bonds based” market.

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Managing Risks & Exposures

RMB denominated transactions can lead to unwanted foreign currency and interest rate exposures that need to be managed, particularly in an environment where market forces are playing an increasing role in setting prices. With this in mind, it’s important to understand the key differences between the onshore (CNY) and offshore (CNH) markets for foreign exchange and interest rates, as well as the various tools at your disposal to effectively manage risk.

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Cross-Border Liquidity Management

In order to support the expansion of cross-border RMB transactions and further internationalise the currency, the PBOC has issued a number of policies to relax controls on cross-border RMB cash pooling and other treasury management activities. At the same time, new cross-border RMB payment infrastructure is positioning the RMB for greater global use in the future.

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1) By Regulation
a. Dodd-Frank

2) By Business
a. Foreign Exchange Wholesale Disclosure

3) By Country
a. US Disclosures