Yuan Makes up a Quarter of Cross-Border Payments in 2014

The Chinese yuan is well on its way to becoming a global currency as the renminbi continues to enjoy growing dominance.

According to the People’s Bank of China (PBOC), the yuan (or renminbi) accounted for a total of 9.95 trillion yuan or $1.6 trillion of cross-border payments in 2014.

This figure reflects the currency’s increasing trading volume globally.

Offshore trading in the Chinese currency, though still strictly controlled by the central government, went up about 350 percent on Thomson Reuters trading platforms in 2014.

On EBS, the yuan became one of the top five traded currencies last year.

China initiated an experiment called the Renminbi Qualified Foreign Institutional Investor scheme (RQFII) to allow those holding yuan to re-invest it in Chinese capital markers.

This scheme aims to urge central banks and investors worldwide to use the renminbi.

The program has seen rapid growth over the years, and by the end of 2014, its size hit 870 billion yuan, up from 270 billion yuan in March last year.

According to the central bank, 10 nations outside China currently purchase Chinese assets through the RQFII. Twenty-eight other central banks have currency swap lines with the country and 14 nations have yuan clearing arrangements.

China hopes to turn the renminbi into a global currency to ease its dependence on the US dollar. The greenback accounts for about a third of China’s $3.84 trillion foreign exchange reserves.