The first renminbi sovereign debt is listed and traded at the London Stock Exchange on October 21 (WU XINTAO)

RMB Globalization

The Chinese currency, renminbi, is quickly becoming more globally used in cross-border trade clearing and settlement.

According to a report from Bank of China, the cross-border renminbi settlement has exceeded 16 trillion yuan ($2.57 trillion) since 2009, when the country first started cross-border trade settlement trials. The currency has become the seventh most popular settlement currency and the ninth most popular currency in foreign exchange trading.

On March 17, the floating band of the renminbi's trading prices against the U.S. dollar in the inter-bank spot foreign exchange market was enlarged from 1 percent to 2 percent, marking a further step toward the marketization of the renminbi exchange rate formation mechanism.

This year, China has also made large strides in promoting the expansion of currency swap agreements and direct trading between the yuan and other currencies as well as the establishment of offshore yuan hubs.

On July 3, the People's Bank of China (PBC) signed an agreement with its South Korean counterpart, the Bank of Korea, on establishing a renminbi clearing arrangement in Seoul. To date, the PBC has authorized offshore renminbi clearing and settlement arrangements in Singapore, London, Frankfurt, Seoul, Paris and Luxembourg, as well as regions such as Taiwan, Hong Kong and Macao.

On October 9, the PBC signed a currency swap agreement with the Russian central bank worth 150 billion yuan ($24.4 billion). To date, China has signed similar agreements worth a total of 2.9 trillion yuan ($472 billion) with 26 overseas monetary authorities.

On October 14, the British Treasury carried out its debut issuance of renminbi bonds, with a total worth of 3 billion yuan ($490 million) and a maturity period of three years. On October 21, Britain's first sovereign bond in Chinese renminbi was listed on the London Stock Exchange for secondary market trading. Britain became the very first Western country to issue a government bond denominated in renminbi.

On October 27, China announced direct trading between the yuan and Singapore dollar beginning October 28. To date, the renminbi has established direct trading with the U.S. dollar, the euro, the British pound, the Japanese yen, the Australian dollar, the New Zealand dollar, the Malaysian ringgit, the Russian ruble and the Singapore dollar.

Chinese Finance Minister Lou Jiwei gives a speech at the signing ceremony of the Asian Infrastructure Investment Bank at the Great Hall of the People in Beijing on October 24 (CFP)

Participation in Global Financial Governance

With mounting global influence, China has taken on more responsibility in the establishment of international and regional development banks.

On July 15, a decision was made to establish a New Development Bank during the Sixth Summit of BRICS countries (Brazil, Russia, India, China and South Africa) in Fortaleza, Brazil.

The bank, to be headquartered in China's Shanghai, aims to finance infrastructure and sustainable development projects in BRICS countries and other emerging and developing economies. The initial subscribed capital will total $50 billion, equally shared among the five founding members.

Another China-led bank, the Asian Infrastructure Investment Bank (AIIB), is in the works. The planned AIIB, which has an initial capital of $50 billion, will be dedicated to funding infrastructure projects in Asia.

This year, preparations for the AIIB are underway. On November 25, Indonesia's Finance Minister signed a Memorandum of Understanding (MOU) to establish the AIIB in Jakarta, joining the 21 countries that signed the MOU on October 24 in Beijing as the bank's founding members.