China Uses Currency Swap Agreement To Pry The Internationalization Of RMB

< p > the people's Bank of China announced in May 30th that it used the currency of bilateral currency swap for the first time, using the 400 million won (about 2 million 400 thousand yuan) funds in the Sino Korean currency exchange agreement to support trade financing.

The British Reuters said in a recent article that this meant the exchange of Chinese and foreign currencies with a total scale of 2 trillion and 500 billion yuan, which has been applied for the first time in five years.

Under the background of close political and economic exchanges between China and South Korea, the scale has a strong symbolic meaning, but from the perspective of RMB internationalization, it has a milestone significance.

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< p > reported that after the international financial crisis, China began to sign currency swap agreements with more than 20 countries and regional monetary authorities since 2009.

The exchange of currency for the first time shows that with the further development of trade, the demand for bilateral currency settlement between China and some countries has been substantially improved.

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At the same time, this does not mean a challenge to the status of the dollar.

Wen Bin, head of macroeconomic research at the strategic development division of the Bank of China, believes that although the use of currency swaps has played an alternative role in the US dollar, it does not want to challenge the position of the US dollar, but rather uses bilateral currencies for its own needs.

A Chinese customer manager of a Korean capital bank said, "China and South Korea have signed the swap agreement and have not used the won. There is little demand at present. At present, the two countries mainly use the US dollar for trade financing and a small amount of RMB."

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< p > the analyst said that after the international a href= "http://www.91se91.com/news/index_cj.asp" > the financial crisis < /a >, the tight liquidity of the US dollar was the original intention of China to sign the currency swap agreement with many countries. However, with the internationalization of the RMB, the "a" href= "http://www.91se91.com/news/index_cj.asp" > swap agreement < /a > also had more connotations.

For example, in Argentina, Malaysia and Indonesia, the RMB is mainly used as a payment and settlement role in trade; Belarus regards Renminbi as reserve currency; Hongkong is the second largest distributing center in the country; currency swap is mainly for the supply of funds, while South Korea mainly helps to finance Chinese enterprises.

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"P > signed a series of local currency swap agreements with the relevant central banks or monetary authorities, on the one hand, in order to deal with short-term liquidity problems, and at the same time, support exchange funds to facilitate bilateral trade financing.

Its operation mechanism is that the central bank can inject the other currency into the domestic financial system by interchanging, so that the domestic commercial organizations can borrow the other currency and pay for the goods imported from the other side.

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P, for example, after signing a currency swap agreement between China and South Korea, the Central Bank of Korea can inject RMB into the domestic financial system as required. When Korean enterprises import goods from China, they do not need to use the US dollar as the intermediary currency of the paction, but they can borrow Renminbi directly from their domestic financial institutions for settlement.

Chinese exporters can receive loans less than a href= "http://www.91se91.com/news/index_cj.asp" > RMB /a, so as to effectively avoid exchange rate risk and reduce exchange charges.

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< p > analysts pointed out that the recent political and economic interaction between China and South Korea has been frequent and warming.

Yu Taixi, head of the trade negotiation room of the Ministry of industry and Commerce resources, said in June 2nd that the eleventh round of negotiations between the FTA and China Korea has made progress in the field of competition and e-commerce, but the two sides are still at the stage of exchange of views in the field of commodities belonging to the core contentious items.

The twelfth round of talks between FTA and Korea will be held in South Korea next month.

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