Belt and Road Initiative boosts yuan's internationalization

The Belt and Road Initiative plays a key role in the internationalization of China's currency, the renminbi, according to experts attending a financial forum in Yichun City, Northeast China's Heilongjiang Province, on Aug 12.

Sun Guofeng, director of Financial Institute of the People's Bank of China (PBOC), the country's central bank, said the currency's rising international status makes it possible for the banking industry to provide financing abroad using it, and the export of renminbi on the capital account through the Belt and Road Initiative helps achieve a macro balance, and is in line with the requirements of government strategy.

According to Guan Tao, former official with the State Administration of Foreign Exchange, the receipt and payment amount of renminbi in cross-border trade between China and countries along the Belt and Road routes still accounts for only 13.9 percent of the total.

"It is necessary that the renminbi should become a main valuation currency for these countries to save their exchange costs, with the increasing of economic and trade contacts," he said.

Meanwhile, Sun said China should encourage cooperation between development financial agencies with domestic and foreign commercial banks.

Yin Yong, vice-governor of PBOC, said: "China enjoys more comparative strength in providing the renminbi because of its larger capital pool. The renminbi should be able to play a bigger role in the construction of the Belt and Road."

The renminbi became an IMF special-drawing-rights currency on Oct 1 last year, a milestone in its internationalization. By the end of June, more than 1,900 financial agencies around the globe had begun using the yuan as their payment currency, according to the Society for Worldwide Interbank Financial Telecommunication.