China has made strong progress in encouraging the international use of its currency, according to Stuart Gulliver, HSBC Group Chief Executive. Speaking at a conference in Hong Kong, Mr Gulliver said that he expected the renminbi (RMB) to become increasingly important to the global financial system.
He said: “Since 2010, renminbi trade settlement has risen from near zero to 22 per cent of China’s total trade, and we expect it to top 50 per cent by 2020. In 2014 the renminbi broke into the top five payment currencies in the world for the very first time. And several central banks already hold the renminbi in their reserves.”
I personally believe we will move to a system where there are three reserve currencies – the US dollar, renminbi and euro
Mr Gulliver noted that the Chinese authorities were continuing to carry out reforms to enable the use of the RMB for trade and investment. He expects that this will accelerate the country’s integration with the global economy, making it easier for foreigners to invest in China, and for Chinese companies to invest overseas.
The renminbi is unlikely to overtake the US dollar as a global currency, Mr Gulliver suggested, but it would increasingly represent a viable alternative. “I personally believe we will move to a system where there are three reserve currencies – the US dollar, renminbi and euro – and that it is naive to believe that the renminbi will replace the US dollar. Instead, I believe we will have a three reserve currency system.”