Martin Chorzempa
t is widely known that global use of China’s currency, the yuan, rose substantially in 2023–24 following Russia’s invasion of Ukraine, as sanctions and the related reordering of Russian trade drove geopolitical tailwinds to the yuan, also known as the renminbi (RMB). What is less known—and contrary to headlines that China is “ditching” the dollar and that the Chinese yuan is “taking over the dollar’s role” —is that the yuan’s momentum has faded. By some important measures its international use has even decreased, both in absolute terms and as a share of global payments over the last two years.
The data paint a mixed picture. China’s Cross-Border Interbank Payment System (CIPS) is the main bright spot for the yuan. Many global banks have recently signed on to this system for yuan payments, and the crisis in the Strait of Hormuz seems to have revived its growth. But yuan-denominated volume in Hong Kong’s Clearing House Automated Transfer System (CHATS), which handles three times as many payments as CIPS, has plunged since mid-2024. The yuan’s share of payments in the Society for Interbank Financial Telecommunications (SWIFT) network has also fallen from its mid-2024 highs. By this measure, the yuan is the world’s sixth most used payments currency, behind even the Canadian dollar. Meanwhile, the US dollar remains unchallenged at historic highs in global foreign exchange payments, and 72 percent of China’s trade is still settled in others’ currencies.
Πηγή: PIIE