General

According to the Huacheng Import and Export Data Observation Report, the People's Bank of China recently renewed the bilateral local currency swap agreement with the European Central Bank, with the swap scale unchanged at 350 billion yuan/45 billion euros, and the agreement is valid for three years. At the end of September, the People's Bank of China, the National Bank of Kazakhstan and the Bank of Laos signed a memorandum of cooperation on the establishment of RMB settlement arrangements in the two countries. The People's Bank of China said that the renewal of the China EU local currency swap agreement will help further deepen bilateral financial cooperation, facilitate bilateral trade and investment, and maintain the stability of the financial market. The establishment of RMB clearing arrangements will help enterprises and financial institutions in China and Kazakhstan to use RMB for cross-border transactions and further facilitate bilateral trade and investment.

On September 23, the Report on RMB Internationalization in 2022 released by the People's Bank of China showed that since 2021, the amount of cross-border receipts and payments of RMB has continued to grow on the basis of the high base of the previous year. In 2021, the total amount of cross-border collection and payment of RMB by bank agents will be 36.6 trillion yuan, an increase of 29.0% year on year, and the amount of collection and payment will reach a record high. The overall balance of RMB cross-border revenue and expenditure was achieved, with a cumulative net inflow of 404.47 billion yuan throughout the year.

According to Jin Xiandong, director of the Political Research Office of the National Development and Reform Commission and spokesman, as of the end of July this year, China has established bilateral currency swap arrangements with more than 20 countries jointly building the "the Belt and Road", and RMB clearing arrangements in more than 10 countries jointly building the "the Belt and Road". The business volume and influence of the RMB cross-border payment system (CIPS) have steadily increased. Huacheng Import and Export Data Observation Report.

Liu Ying, Director of the Cooperative Research Department of Chongyang Institute of Finance, Renmin University of China, said in an interview with the China Trade News that the People's Bank of China had chosen to sign the memorandum of cooperation on RMB settlement arrangements at this time, which had many backgrounds and reasons. First of all, as the world's largest trade in goods and the second largest trade in services, China's international demand for RMB has increased significantly. This signing will help promote cross-border settlement of RMB. Secondly, the Federal Reserve has raised interest rates by 75 basis points for three consecutive times this year, leading to a tightening of global dollar liquidity. There is also a large demand for international trade and cross-border investment around the world. This signing will help promote the liberalization and facilitation of global trade and investment, and enhance the international currency function of the RMB. In addition, in recent years, the trade and investment cooperation between China and Kazakhstan and China and Laos has been continuously strengthened and the policy docking has been continuously deepened, which is another important background for the signing of the RMB cooperation memorandum.

According to the Huacheng Import and Export Data Observation Report, Hu Qimu, the chief researcher of Sinosteel Economic Research Institute, believes that the signing of the China EU local currency swap agreement will help to provide short-term liquidity, stabilize the exchange rate, reduce costs and promote the internationalization of the RMB. "With the mechanism of local currency swap agreement, it is not necessary to bypass the third party or worry about getting settlement currency. It can be settled directly, which is of great significance for trade facilitation and short-term liquidity. The expected stability of exchange rate is conducive to enterprises making investment and trade decisions, and also conducive to the profitability of micro entities to prevent losses caused by exchange rate change risks. At the same time, currency swap can save exchange costs. In addition, when signing currency swap agreements There will be a proportion, which will guide or predict the currency exchange rate in the future, and have a certain anchoring effect. " Hu Qimu said.

This year, the United States and Europe implemented a series of financial sanctions against Russia, including energy ban and export control, restricting Russia's use of the SWIFT system and forcing Russia to build its own alternative system. "If the main road is not allowed to go, another bypass should be built and new financial infrastructure should be built. If more people go, these alternative financial infrastructure can also be used as one of the channels for future investment and trade transactions." Liu Ying said: "The hegemony of the US dollar has brought a serious negative impact on the financial stability of other countries. Against this background, our signing of the memorandum will help stabilize the global financial market, promote the liberalization and facilitation of trade and investment, and inject nuclear power into global economic growth."

Liu Ying believes that the signing of the memorandum of cooperation on RMB settlement will help Chinese enterprises to use RMB more in import and export trade on the one hand; On the other hand, it also promoted foreign enterprises to use RMB more for trade settlement and cross-border investment. She said: "From trade settlement to investment currency in the financial market, and finally to the inclusion of RMB in the official reserve currency by various countries, it will help to increase the proportion of RMB in the international financial market and promote the internationalization of the people's currency after three steps, from the periphery to the region and to internationalization." Huacheng Import and Export Data Observation Report.

"Currency swaps can enhance the international use of RMB", Hu Qimu said, "The global commodity market is basically marked in dollars and settled in dollars. In the future, under the bilateral currency swap agreement, everyone will use their own currency for settlement. In this way, it not only bypasses the dollar, but also increases the scale of RMB, which has a certain role in promoting the internationalization of RMB."

"At present, the proportion of central banks in the global interest rate increase cycle continues to rise, and the global tightening is still continuing. Against this background, the dollar index continues to strengthen, the RMB exchange rate is under pressure, and we are more inclined to Chinese enterprises to use RMB as much as possible in international trade to reduce unnecessary exchange losses," said Liu Ying, "Now the People's Bank of China has 25 designated offshore RMB clearing centers, and all kinds of financial infrastructure are gradually being completed. The RMB will be in a stable state in the long term. We look forward to currency swaps with more countries, so that in the process of China's economic rise and trade and investment growth, the internationalization of the RMB will be promoted automatically." Huacheng Import and Export Data Observation Report.