With the development of "One Belt One Road" and the establishment of the Asian Infrastructure Investment Bank, the BRICS Development Bank, and the Silk Road Fund, China is now assuming greater responsibilities in the international financial system, and the internationalization of RMB is gaining further momentum. Some media have commented that although this process cannot be as smooth and plain as silk, it’s very likely to move faster than most people have expected. Some multinational enterprises have expressed their approval of RMB Settlement. 

According to a survey titled “RMB: The New Global Currency” issued by Allen & Overy International Law Firm recently, multinational enterprises have an increasing demand for RMB in transactions and it is becoming a key international currency.

This report is based on analysis of senior managers from 150 transnational corporations of different industries in the U.S., Europe and the Asia-Pacific region. 90 percent of the companies interviewed said it was important - even essential - for them to use RMB, while 60 percent forecast that the volume of cross-border RMB transactions was expected to double in the next five years. Meanwhile, more than half of non-Chinese multinational enterprises conduct offshore market payments in RMB outside China, including in the offshore markets in Singapore, South Korea, the Eurozone and Britain, which demonstrates that RMB trading is expanding beyond the domestic market, and the globalization process is accelerating.

The report indicates that a series of measures and the further opening-up of the financial market are promoting the substantial increase of RMB use in the international market. The globalization of the RMB has been significantly propelled by the cross-border trading RMB settlements implemented in 2009 and the commitment to “gradually increase the RMB capital account convertibility of RMB” of Premier Li Keqiang in the 2015 Government Work Report. For example, the application of a two-way cross-border RMB cash pool in Shanghai Free Trade Zone has lowered the trading costs of multinational enterprises. 37 percent of interviewees said they had already applied this mechanism, while 53 percent indicated that they were considering use of this system.

With the steady globalization of the RMB, more and more corporations not only take RMB as a currency for settlement but also a choice to enrich their financing channels. In future, for those firms who have a substantial trade and income in Chinese market, the RMB capital market will be very attractive, which will encourage further globalization of the RMB. 

This article was edited and translated from 《跨国企业爱上人民币结算 人民币国际化稳步发展》, source: People's Daily.