RMB settlement speeds up in Europe

Europe’s proportion of global RMB payment value continues to increase, indicating that financial cooperation between China and Europe is accelerating. This will not only accelerate the internationalization of the RMB, but also bring more opportunities to China-EU bilateral trade and investment.
Frequent interactions between China and Europe in the financial field in recent years are bearing fruit, and RMB settlement is showing rapid growth in Europe. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) recently announced that Europe currently accounts for 10% of the global RMB payment value. Moreover, the amount of direct RMB exchange payments between Europe and Mainland China and Hong Kong has increased by 105% in the past year.
Analysts pointed out that the rapid development of China-EU RMB settlement cooperation is based on economic and trade cooperation, and as China-EU trade and investment deepen and expand, financial cooperation has become a necessary choice. In the next step, the central banks of China and Europe may focus on expanding RMB investment and use.
​RMB payment is developing rapidly in Europe
SWIFT recently announced that Europe accounts for 10% of the global RMB payment value. Four European countries, the UK, France, Germany and Luxembourg, have ranked among the top ten RMB offshore centers, ranking second, sixth and fourth in the world respectively. 8th and 9th. “Fundamentally speaking, the increase in Europe’s share of global RMB payment value is based on the increasingly frequent trade and investment exchanges between China and Europe.” Bai Ming, deputy director and researcher of the International Market Research Department of the Ministry of Commerce Research Institute, said in an interview with reporters express.
Relevant data shows that since China and the EU established a comprehensive strategic partnership, bilateral trade volume has quadrupled in 10 years, reaching US$559.1 billion in 2013. Large projects in the fields of energy, aviation, automobiles and other fields have become important areas of economic and trade cooperation between the two sides. When Chinese President Xi Jinping met with European Commission President Barroso in March this year, he stated that trade and investment should continue to play the main engine role in China-EU cooperation and strive to achieve an annual trade volume of US$1 trillion.
Market analysts believe that the “double advancement” of trade, investment and finance has become an important strategy for China to expand economic and trade cooperation and create a new international financial order.
“Based on the needs of the real economy, China and Europe are accelerating financial cooperation, which is also an important reason for increasing Europe’s share of global RMB payment value.” Wen Bin, chief researcher of China Minsheng Bank, said in an interview with reporters.
In fact, with the demand for RMB settlement in economic and trade cooperation between the two sides and the strengthening of the willingness of both sides to cooperate in finance, such actions have already been carried out. The People’s Bank of China signed currency swap agreements of 200 billion yuan and 400 billion yuan with the United Kingdom and the European Central Bank respectively in June and November 2013. In March this year, the People’s Bank of China signed memorandums of understanding with the central banks of Germany and the United Kingdom to establish RMB clearing mechanisms in Frankfurt and London respectively.
​Favorable for Sino-European trade and investment
“The financial cooperation between the two parties will not only accelerate the process of RMB internationalization, but also bring opportunities to foreign trade and investment.” Wen Bin pointed out that using RMB settlement in trade and investment can, firstly, improve exchange efficiency and reduce bilateral The enterprise’s exchange costs; second, it can avoid risks caused by third-party currency exchange rate fluctuations.
Bai Ming said that compared with small-scale trade, promoting RMB settlement is of greater significance for investment cooperation in some large projects. The further development of China-EU economic and trade cooperation is inseparable from financial cooperation. “For many large projects, if the exchange is too troublesome and the cost is high, then companies may be inclined to give up on the balance of trade-offs when making decisions.”
In fact, with the deepening and expansion of China-EU economic and trade cooperation, bilateral cooperation on large projects has become more and more frequent. The latest “UK Foreign Investment Annual Report 2013/2014” released by the UK Investment and Trade Agency shows that in the 2013/2014 financial year, there were 88 investment projects from China, ranking first among developing countries, especially in the fields of infrastructure and development. Of the five key projects listed by the General Administration of Investment and Trade, four are related to Chinese companies.
At present, the use of RMB is still showing a considerable upward trend. A report released by SWIFT also showed that from July last year to July this year, the amount of direct RMB exchange payments between Europe, Mainland China and Hong Kong increased by 105%, with the UK growing the fastest, reaching 123.6%.
Wen Bin said that from the perspective of financial cooperation and promoting the internationalization of RMB, as the offshore RMB market expands and the number of overseas RMB increases, the next step is to expand the return channel of RMB and the investment and use functions of RMB, which can further enhance The willingness of overseas markets to settle and hold RMB in RMB.