Chinese officials are encouraging banks to increase yuan lending to promote foreign trade, global use of the currency and opening up of the financial system, according to a report by the Global Times.
Regulators asked banks to provide more convenient settlement services, to both extend overseas yuan lending and encourage innovation in cross-border yuan settlement “to better meet the needs of such investment and financing”, according to a notice issued by the Ministry of Commerce and the People’s Bank of China.
“We will encourage banks to cut yuan financing costs, support enterprises to clinch business deals engaged in the Belt and Road Initiative, and we encourage overseas projects and enterprises that meet the conditions to prioritise in using yuan loans,” the notice said, the state media outlet said in its report on Thursday.
Fifth most active currency
The yuan is currently the fifth most used currency in the world, although its share of global dealings is still tiny compared to the US dollar.
Use of the yuan jumped to 2.37% of all global payments in November, up from 2.13% in October, the Global Times report said.
The US dollar is the world’s leading currency, which academics say stems from “the size and strength of the US economy, its stability and openness to trade and capital flows, and strong property rights and the rule of law,” a report posted by the Federal Reserve in October 2021 says.
About 60% of global foreign reserves were still held in dollars, although that figure is down from 71% in 2000, the report said.
- Jim Pollard