Yuan could catch up with yen, British pound

Chinese yuan could quickly catch up with the yen and British pound in terms of international usage, if managed well, said Chen Yulu, a monetary policy committee member at People's Bank of China, on Sunday.

"Yuan's global float is at the stage of fast growth. If we promote the process with appropriate measures, the degree of yuan's internationalization can quickly catch up with the yen and the British pound."

An index measuring yuan's internationalization has increased by 49 percent compared with last year, said Chen, who is also president of Beijing-based Renmin University of China.

"If trade with Latin America, the African Union, Japan and South Korea could be increasingly settled in yuan, then the currency's internationalization index could be close to the yen and the pound, which means yuan would become the first member of international currency club among the emerging economies."

Chen made the remarks after releasing a report on the international development of yuan.

He said that there's still a long way to go as enterprises lack the capability and willingness to settle their business in yuan, international development of Chinese financial institutions lags behind trade activities, and direct conversion between yuan and foreign currencies in the foreign exchange market is still too limited.

The report suggests that in the short term China should actively promote yuan settlement in bilateral trade by expanding direct investment and establishing free trade zones or other cooperation mechanisms to promote the use of yuan.

"At the same time we should promote the development of domestic financial institutions and yuan-denominated lending business related to trade."

Earlier this month, Chen wrote in a separate report that the yuan will become a key global currency in 30 years.

And the liberalization of the country's capital account, covering portfolio investment and borrowing, will be achieved between 2015 and 2020, he wrote.