RMB Internationalization: HKMA: Hong Kong Has Expanded RMB Reach to 12 Countries; More Measures on RMB Internationalization to Be Rolled Out in Coming Weeks

Amid a gradual decline in the RMB's share of global international payments, and as China declares its ambition to become a financial powerhouse under the "15th Five-Year Plan," Hong Kong—the world’s largest offshore RMB center—is actively working to accelerate the internationalization of the RMB. Chief Executive of the Hong Kong Monetary Authority (HKMA), Yee Wai-man, revealed that the authority has doubled the total funding allocation for RMB business operations to RMB 200 billion (approximately EUR 25.8 billion), channeling these funds through Hong Kong’s banking system to link up with 12 different countries and regions. It is expected that more measures related to RMB internationalization and bond market development will be introduced in the coming weeks.

However, in reality, the RMB’s share in global international payments has declined slightly. According to data from SWIFT, in May this year, the RMB accounted for 2.75% of global international payments—slightly down from the previous range of 2.85% to 3.10%, but still maintaining its position as the sixth-largest payment currency globally, following the US dollar, euro, British pound, and Japanese yen. Compared to earlier periods, the RMB’s share has dropped from fourth place globally in 2024 to fifth place in 2025, and further declined by one rank in the first half of this year.

Nevertheless, industry experts and the HKMA have pointed out that SWIFT data do not fully reflect the complete picture of cross-border RMB payments, as many trade settlements have shifted to China’s self-developed Cross-Border Interbank Payment System (CIPS). If the statistical scope focuses on cross-border trade settlements between mainland China and the rest of the world, the actual usage rate of the RMB is estimated to exceed 7%, ranking third globally. Moreover, a white paper released by Bank of China in early June stated that in many cross-border transactions involving foreign trade and small and micro enterprises, the proportion settled in RMB has already surpassed 50%.

Undoubtedly, Hong Kong will play a key role in advancing RMB internationalization. Speaking at a commercial radio program yesterday (5th), Yee said that last week he issued guidance to banks outlining six best practices to facilitate the practical implementation of RMB transactions. These include offering one-stop, end-to-end RMB settlement and financing solutions for cross-border businesses, adjusting internal bank performance evaluation mechanisms to encourage teams to proactively recommend RMB settlement, and promoting the use of RMB among overseas buyers and suppliers. The goal is to make using RMB as convenient as using the US dollar. The HKMA will also regularly collect RMB business data from banks, aiming to drive banks to assist clients in adopting RMB usage.

He added that during the implementation of RMB transactions, pain points will be gradually addressed—for example, the relatively high exchange rates when converting RMB directly into other currencies. Earlier, the HKMA had collaborated with the People’s Bank of China and Bank Indonesia to promote direct exchange arrangements ("direct pairing"). If successful, this model could later be applied in markets such as Malaysia and the Middle East.

Hong Kong Also Worried About the “AI Bubble”

Regarding advanced AI models reportedly capable of identifying minor security vulnerabilities posing potential risks to the banking sector, Yee stated that the banking industry in Hong Kong has already widely adopted fintech solutions. He remarked, “Where there is an AI spear, there must be an AI shield,” emphasizing that the HKMA has established a cross-industry task force dedicated to strengthening intelligence gathering, defense mechanisms, and patching against AI-related threats.

Beyond security concerns, Yee acknowledged genuine worries about the emergence of an “AI bubble.” With increasing funding flowing into AI startups, yet uncertain prospects for commercialization and profit generation, stock markets have become highly enthusiastic about AI. He warned that if a market correction occurs simultaneously with inflation concerns triggered by geopolitical tensions, it could lead to a dangerous compounding effect—resulting in both equities and bonds declining together. However, he also offered reassurance, stating that Hong Kong has solid fundamentals and that the HKMA will fulfill its responsibilities by maintaining close monitoring and preparing adequate contingency measures.

Meanwhile, Financial Secretary Paul Chan also discussed the promotion of RMB internationalization in his personal blog on the same day. He noted that over 70% of global offshore RMB payment and settlement activities currently flow through Hong Kong. In interbank clearing within Hong Kong, monthly RMB settlement volume exceeds HK$41 trillion (approximately EUR 4.6 trillion), equivalent to a daily settlement scale of around HK$2 trillion per working day. Going forward, greater efforts will be made to encourage businesses to adopt offshore RMB in trade and financing activities, while enhancing cooperation with central banks across the region. The upcoming Hong Kong Fixed Income & Currency Summit and Bond Connect Forum scheduled for tomorrow (7th) will focus particularly on the development of the offshore RMB market.

Source: rfi

Original: toutiao.com/article/1869954866248716/

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