Currency internationalization refers to the process of a currency becoming an international currency beyond the borders of the issuing country, and to be used as a pricing unit, transaction agency, payment method, investment currency and reserve currency. Whether a currency could join the international market to become an international currency is decided by the issuing country’s political and economic strength, import and export trade volume and the development level of its financial market.

Since the implementation of reform and open-up policy, especially since China became a WTO member in 2001, China and the world economy has become increasingly integrated. China is gradually loosening the control on foreign exchange, with the current account fully released; the RMB exchange rate being steady overall with minor appreciation, and the influence of RMB in neighbouring countries and regions being gradually extended. All of these factors are the preconditions for RMB internationalization.  Below is an in-depth discussion.

Firstly, the rise of Chinese economy has a significant improvement on China’s international influence. China has become the world’s second largest economy and the second largest country in trading. China also holds the largest amount of foreign exchange reserves. China’s comprehensive national strength increased significantly. These are the solid economic foundations for other countries and regions all over the world to trust and use RMB.

Secondly, the value of RMB is stable. China has implemented a prudent monetary policy. During the worldwide financial crisis that happened in recent years, many currencies depreciated a fair bit, while RMB exchange rate was kept steadily to prevent the further expansion of the crisis, which also provides a solid and reliable credit basis for RMB.

Thirdly, the Chinese government pays high attention to and actively promotes the internationalization of RMB. In July 2009, PBOC worked with other five departments to issue RMB Cross Border Trade Settlement Pilot Management Policy, which marks the beginning of RMB internationalization. Subsequently, the Chinese government introduced a series of intensive policies and measures to further accelerate the internationalization of RMB.

For commercial banks, there are many opportunities during the process of RMB Internationalization. It is very important for the future development of commercial banks if they can follow the pace of RMB internationalization and seize the business opportunities.

CCB Sydney Branch was established in Nov. 2010. Since the beginning, the management has regarded RMB business as one of the most important strategies for our branch. In May 2011, CCB Sydney processed the first RMB cross border transaction. CCB Sydney branch now has around twenty types of RMB products, which covers deposits, loans, settlements and derivatives. For the first half of year 2013, CCB Sydney has processed CNY15.5 billion cross border settlement, which is accounted for 40% of local interbank market share.

In the future introductions, we will focus on the current CCB Sydney RMB products. And we hope by providing a full range financial services to both Chinese domestic and overseas clients, we can also contribute our strength to RMB internationalization at the same time.