Industry dynamic —What is RMB settlement for cross-border trade? What is the significance of RMB settlement of cross-border trade?

What is RMB settlement for cross-border trade?

The cross-border trade RMB settlement refers to the settlement of cross-border trade by enterprises designated by the state on a voluntary basis, and commercial backs may directly provide RMB related settlement services for cross-border trade to enterprises within the policy scope prescribed by the Chinese People’s Bank.

There is a clear demand for RMB for international settlement among residents and non-residents. China’s foreign trade has been quite large in scale, at present, not only domestic import and export enterprises with the ability to choose the settlement currency and pricing capacity have strong demand for RMB for international settlement, but also foreign exporters (exporting to China) who want to gain the benefits of RMB appreciation and foreign enterprises with considerable investment and RMB income in the Mainland have great demand for the use of RMB for international settlement.

What is the significance of RMB settlement of cross-border trade?  

Secondly, it is conducive to further improving the RMB exchange rate formation mechanism. After the RMB is used for international settlement in the region, the currency value has a wider range and update angle of reference standards, which is conducive to the improvement of RMB exchange rate formation mechanism.

Thirdly, it is conducive to promoting the multipolar development of the international monetary system. The once-in-a-century financial crisis has exposed weaknesses in the international monetary system. Therefore, promoting the use of RMB for international settlement and enhancing the international status of RMB is conducive to gradually changing the dollar-centric international monetary system and curbing its disadvantages and negative effects.

Fourthly, it is conducive to promoting the development and opening up of China’s financial industry and enhancing China’s ability to allocate financial resources in the international market.

Fifthly, it is conducive to accelerating the construction of the Shanghai International Financial Center. With the development of RMB for the scope and scale of international settlement, Shanghai will probably gradually grow into a regional RMB clearing center, so that Shanghai’s financial function will be more complete, while promoting the further development of other financial functions, thus promoting Shanghai to gradually establish its position as an international financial center.