The new instructions laid by Society for Worldwide Interbank Financial Telecommunication (SWIFT) in collaboration with Hong Kong-based three investor working group comprising 24 institutions, including SMPG/ISITC, ASIFMA, ISDA and HKIFA, have agreed to put together the guidelines for their market segments.
Under the new rule, the firms will have to distinguish between onshore and offshore Yuan payments, providing easy processing of transitions.
Prior to the new guidelines, China restrictive capital control measures were making it tough to get offshore Yuan back into China. Now, the selling of Yuan-denominated bonds is unlikely to go unnoticed by Beijing.
According to an estimate, nearly 80% of Yuan payments are made in Hong Kong and the volume of global payments denominated in RMB grew significantly during the last 18 months. In November 2011, nearly 1085 financial institutions in 95 countries carried out their transactions in Yuan.
The Chinese Government is putting its effort to attract more FDI in the country, by alleviating the problem of transaction through RMB. The significant rise in Chinese economy complemented with new guidelines will attract companies to invest Yuan in China.
SWIFT renminbi internationalization director Lisa O’Connor said this is indeed an example of where the industry can quickly collaborate to solve common problems to keep markets moving forward securely and efficiently, driven by local needs with global impact.
