China's payment system gets boost from renminbi rise

Cross-border renminbi use for trade in services grew 22.3% YoY to $165b.

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More global financial institutions are joining China's cross-border interbank payment system amidst the renminbi's rise as a trade currency, according to financial analysts.

"We've noticed a shift towards an increased use of the renminbi for payment and trade requirements," Michael von Fintel, head of Financial Institutions at Absa Corporate and Investment Banking Ltd., told Asian Banking & Finance.

The pan-African bank said the African market is primarily driven by the US dollar, though more clients have started to transact in renminbi due to the bank's growing client base in China.

In the first eight months of the year, cross-border renminbi payments and receipts rose 21.1% year-on-year (YoY) to $5.94t, the People's Bank of China (PBOC) said in October.

Cross-border renminbi use for trade in services grew 22.3% YoY to $165b, accounting for 31.8% of total settlements.

The PBOC, China's central bank, plans to enhance the systems governing cross-border renminbi transactions, widen access to financial markets, upgrade infrastructure, and improve regulations.