RMB Cross-Border Use And Speed Up Market Demand Is The Driving Force.

Significant progress will be made in the cross border use of RMB. The French central bank governor, Noah, said in June 11th that the US's punishment for the high price of the Bank of France in Paris could cause the trade between China and Europe to stop using the US dollar and settle in Renminbi and euros. According to the financial times, Azerbaijan's sovereign wealth fund, the Azerbaijan National Petroleum Fund (Sofaz), plans to spend $1 billion 800 million this year to invest in Renminbi assets. In addition, the newspaper also said that China Construction Bank (601939, stock bar) may be designated as the clearing bank of RMB in London, and the competitiveness of Britain as the main offshore RMB trading center has been enhanced.

In response, Professor Zhao Xijun, vice president of the school of Finance and finance of Renmin University of China in June 12th, told an interview with our reporter that in view of China's sustained economic development, increasing trade and stable RMB value, commercial banks, financial centers and governments all tend to use Renminbi at all levels. Ceng Gang, director of the Research Institute of the Financial Research Institute of the Chinese Academy of Social Sciences, told the reporter that the cross border use of RMB is reflected in three aspects: trade settlement, transaction investment and reserve currency. There is still room for growth in RMB trade settlement. Offshore market development is of great significance to RMB exchange and investment, but the key lies in the opening of domestic capital account. The investment of a sovereign wealth fund is an important manifestation of RMB internationalization as a reserve currency depends on the first two aspects. "The internationalization of RMB should be in line with the needs of the real economy, based on the trade side, and the financial and reserve currencies should go with the flow and not be deliberately pursued." He added.

The governor of the French central bank has somewhat "scare" the US's attitude towards the use of the renminbi, because the United States may impose a maximum fine of $16 billion on the French bank of Paris, which is suspected of violating the US order, and will suspend its US dollar clearing business. However, Zhao Xijun believes that the possibility of Sino European trade using RMB and euro is very large. Not using the third party currency can reduce risks and reduce the cost of settlement, which is of positive significance for the further development of bilateral trade. Not only in the field of trade but also in the field of investment, he expects that bilateral investment between China and Europe will grow faster than that between China and the US.

In fact, France is not the first country to say that the dollar should be avoided as far as possible. Russia is also actively pursuing "de dollarization" because of tensions in Ukraine and sanctions imposed by the United States on Russia. In late May, the financial institutions of China and Russia signed the payment agreement in local currency, directly using RMB and rouble settlement. Moreover, over the past year, the scale of RMB settlement in the US has also increased rapidly. According to the latest data from the global Interbank Financial Telecommunication Association (SWIFT), in the year to April this year, the US's RMB settlement in mainland China and Hongkong increased by 229%, and increased by 327% in the rest of the world. In April this year, the renminbi has become the seventh largest payment currency in the world, and the global RMB settlement accounts for 1.43% of the global currency settlement.

Zhao Xijun said that the internationalization of RMB trade settlement should follow the trend of "peripheral first", "Regionalization" and "globalization". "No matter in Europe or in the United States, the growth of RMB trade settlement scale is an inevitable trend." Zeng Gang analyzed that because China is the largest trading country in the world, it should match the trade status of China. Therefore, the scale of RMB trade settlement will have great room for growth in the future. According to the data released by the people's Bank of China, the RMB settlement business of cross-border trade is 2 trillion and 180 billion yuan from 1 to April this year, and the RMB settlement business of direct investment is 268 billion 990 million yuan.

In Renminbi Trading investment Zeng believes that it is mainly reflected in offshore markets and China. capital account The opening is two pieces. Zhao Xijun said that the Construction Bank became the London RMB clearing bank, which can facilitate the development of RMB business by European financial institutions, improve the efficiency and liquidity of RMB transactions, and contribute to the promotion of the construction of the RMB offshore trading center in London. In late March, the German central bank and the Bank of England signed a memorandum of understanding with the people's Bank of China to establish RMB clearing mechanism in Frankfurt and London. The reporter noted that Zhao Pu, a Canadian ambassador to China, said recently that Canada wanted to build the first offshore RMB center in North America. At the same time, Bank of China (601988, stock bar), Agricultural Bank (601288, stock bar) and other financial institutions issue RMB bonds overseas, providing more financial assets for offshore RMB market.

"RMB offshore market pairs RMB Internationalization is of great importance, but not the mainstream. Zeng said that the opening of the domestic capital market is the right way. Professor Pan Yingli, director of the modern financial research center of Shanghai Jiao Tong University, holds that capital account liberalization requires three conditions: the interest rate liberalization and the enhancement of the international competitiveness of the banking system, and the in-depth development of the local financial market, especially the deep development of the domestic bond market and the moderate entry of the RMB exchange rate. This year's two sessions' work report has elaborated on these three aspects in deepening the reform of the financial system. Zeng said that China's capital account is bound to be open, but the extent to which it is open is uncertain.

In terms of RMB as reserve currency, it has been analyzed that other countries hold Renminbi for import payment and the two is to maintain exchange rate stability. Standard Chartered estimates that the total assets of central banks and sovereign wealth funds are about 300 billion yuan (US $48 billion), accounting for less than 0.5% of total assets held by central banks and sovereign wealth funds. According to analysts, the Central Bank of Australia, Chile and Nigeria confirmed the purchase of a small amount of Renminbi. For a sovereign wealth fund to invest in Renminbi assets, Zhao Xijun believes that this indicates that the renminbi is moving towards the reserve currency. Mr Zeng said, "the 1 billion 800 million US dollar assets are mainly used to maintain value and increase value, which is the internationalization of RMB, but the scale is still very small."

In the three aspects of comprehensive trade settlement, transaction investment and reserve currency, the cross-border use of RMB has been advancing continuously recently. In the process, Zeng just believed that we should base ourselves on the trade side, and that the financial and reserve currencies should go with the flow and not deliberately pursue the needs of the development of the real economy. Zhao Xijun also holds similar views. He said that the use of the renminbi is more of a market demand, and the monetary authority should do something to meet the potential needs. At the macro level, it has signed a currency swap agreement with other central banks to provide support for the development of bilateral trade. At the micro level, we need to improve some specific businesses to facilitate cross-border investment.