Bank of China released Cross-border RMB Index (CRI) for the second quarter 2023 on Sept 19 of that year. The results showed that the CRI for the second quarter 2023 is 352, up 9 points from the previous quarter and 6 points higher than the forecast value.
In the second quarter, the cross-border use of RMB experienced rapid growth, presenting the following characteristics:
With the deepening of local currency settlement cooperation, more countries were considering using RMB for settlement, amid high expectations of the US Federal Reserve rate hikes and increased exchange rate volatility. Argentina announced the use of RMB to pay for imports from China, while the Brazilian government said it would use more local currency for trade settlement. The governor of the Bank of Thailand expressed support for more RMB settlements, and Bank Indonesia announced initiatives to promote local currency settlement cooperation with more countries.
Increased local currency settlement cooperation has lifted the demand for cross-border RMB settlements, thereby expanding the scale of China’s cross-border RMB receipts and payments. In the second quarter of 2023, the total cross-border RMB remittance received and paid by Chinese customers grew by 24.8 percent compared to the previous quarter. The proportion of RMB transactions in BOC’s agency transactions was 49.2 percent, up 3.9 percentage points from the previous quarter.
With financial markets connecting more closely, the RMB usage for cross-border securities investment has expanded. In May 2023, the Swap Connect was officially launched, providing greater convenience for overseas investors in managing interest rate risks. In June the same year, the launch of the RMB-HKD Dual Counter Model further enriched the options for overseas RMB financial assets, contributing to the expansion of cross-border RMB usage under capital accounts. In the second quarter of 2023, cross-border RMB settlement under securities investments grew by 31.2 percent year-on-year.
The rapid growth in regional RMB cross-border remittances facilitated the RMB usage in overseas payments. Client remittances in RMB from the Middle East and Africa grew by 15.7 percent and 14.4 percent, respectively, compared to the previous quarter. Remittances from Brazil, Argentina, Peru, and Chile in South America grew by 8.9 percent quarter-on-quarter, and remittances from four Central Asian countries grew by 8 percent quarter-on-quarter.
In major economic blocs, RMB client remittances within the RCEP (Regional Comprehensive Economic Partnership) region grew by 1.1 percent quarter-on-quarter, including a 3.4 percent increase among the ASEAN (Association of Southeast Asian Nations) member states. RMB client remittances from countries involved in the Belt and Road Initiative maintained rapid growth, increasing by 13 percent quarter-on-quarter in the second quarter of 2023.
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