Promoting #RMB in international transactions is increasingly important, says Zhang Xiaohui.
In the past, businesses mainly considered market factors when choosing a currency for cross-border settlements, e.g. exchange rate risk, currency conversion costs & financing costs...
RMB as a currency with high interest rates are attractive to foreign investors as China opens up its financial market wider, but in global trade, its costs are higher than the USD, the Euro or the Japanese yen...
However, concerned that settlements in #USD could be arrested by the US' financial sanctions&long-arm jurisdictions, more businesses have turned to RMB in cross-border transactions. The dependence on the USD system for settlements could be reduced through refined management...
Most countries adopt the netting model when they settle in USD, but most Chinese banks choose the gross settlement system. Their headquarters, branches or overseas branches all complete the settlements directly through SWIFT and CHIPS...
This has not only incurred higher service charges, but also increased Chinese businesses' reliance on the American payment settlement system. Amid the dual circulation drive, China has to widely promote the use of netting settlement.
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