Going global: Trends and implications in the internationalisation of China’s currency – 2017 is the second in a series of reports on RMB internationalisation sponsored by the UK Department for International Trade and the China Foreign Exchange Trade System, and includes interviews with 15 industry participants, and surveys more than 50 others. The report focuses on the opportunities, challenges and implications, as seen by those involved in international RMB products and services. It considers both proactive attempts to stimulate RMB use, as well as the wider factors driving RMB internationalisation.

The report notes that China is investing in long-term international and domestic frameworks that support the internationalisation of the RMB. There is much for RMB watchers to celebrate, from its recent inclusion as the fifth currency in the IMF’s special drawing rights scheme, or the addition of new infrastructure to encourage RMB investments, such as Shenzhen-Hong Kong Stock Connect, or FTSE Russell’s transitional inclusion of Chinese equity into global indices. 

It also highlights the challenges. ‘Restrictive regulations’ for example, remains the top challenge identified by respondents for the second year running. Foreign institutions may therefore need to articulate what role they want the RMB and China to play in their own long-term strategies. They will also need to follow through with the required operational investments to make that happen.

Our interviews and survey research also indicate that the private sector will benefit from greater regulatory clarity and regular communication that reassures and reconfirms China’s long-term resolve.

Going forward, the survey interviews point to market anticipation that several cross-border programmes will see some sort of regulatory and usage volume breakthroughs. In the next three to five years, the participants generally expect the fundamentals to take over from regulation-driven initiatives in the RMB journey.