RMB internationalisation moving backwards, says Natixis

HONG KONG - RMB internationalisation, which was high on the Chinese Government’s priorities, is moving backwards, according to the NATIXIS RMB Internationalization Monitor , which evaluates the four different uses of RMB as an international currency, both in the private and official domain.

These are 1) Medium of exchange; 2) Store of value; 3) Unit of account and; 4) Standard of deferred payment.

Natixis finds that, in all of them, the use of RMB as an international currency has been retreating since 2016. This is particularly the case of two of the functions in which most progress had been made, namely medium of exchange (international payments) and store of value (investment by non- residents).

“The only positive outlook could come from the fourth function of an international currency, namely standard of deferred payment (bond issuance),” the report says.

“This follows the Chinese Government’s efforts to attract capital inflows into the rapidly-growing bond market – with the recently announced China–Hong Kong Bond Connect as the best illustration.”

The report also allots a section digging into the latest developments in the largest RMB offshore centre – Hong Kong. “Hong Kong’s situation as offshore RMB centre not only reflects the general retrenchment but actually intensifies it compared to other RMB offshore centres,” the report says.  www.natixis.com (ATI)

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