China's central bank vows to promote yuan internationalization

The People's Bank of China, the central bank, vows to promote the internationalization of the Chinese yuan in a steady and prudent manner, with a series of targets set for the opening-up of the financial market. Facilitation of the use of the yuan as an international currency is an important highlight.

The latest statement was issued by the macro-prudential management bureau of the People's Bank of China on Thursday, as part of another effort to promote the use of the Chinese currency in the international market.

Continuous efforts will be made to steadily advance bilateral currency swaps and local currency settlement cooperation between central banks, the statement said. This includes effectively leveraging currency swaps to support the development of the offshore yuan market and facilitate trade and investment.

The central bank will also strengthen LCS cooperation with neighboring countries, including the ASEAN nations.

In promoting the steady development of the yuan's internationalization, it is also essential to ensure it develops in a healthy way.

The statement mentioned that supervision targeting cross-border yuan transactions will be strengthened, including improvements to the cross-border capital flow assessment and early warning system.

Currently, the People's Bank of China has signed a total of 29 valid bilateral local currency swap agreements with overseas central banks or monetary authorities. These agreements have played a positive role in facilitating bilateral trade and investments, as well as maintaining regional financial stability, the statement said.

For example, the launch of the Local Currency Settlement (LCS) framework between China and Indonesia signifies strengthened cooperation between central banks and a push for increased use of local currencies.

The use of the yuan in the surrounding areas and in countries participating in the Belt and Road Initiative is growing rapidly.

From January to September 2023, cross-border yuan settlements for trade in goods with neighboring countries increased by 56 percent year-on-year, and those under the joint initiative rose by 66 percent.