Renminbi-denominated payments made by Taiwan grew by 120% over the last six months, pushing the nation forwards as the next offshore hub for the Chinese currency.
Taiwan has moved up three positions to the fourth place out of the 136 countries exchanging renminbi payments, surpassing countries like the United States and Australia, according to Swift’s latest RMB Tracker released on March 26.
Excluding Hong Kong and China, Taiwan is now trailing behind France which is in third place, but remains a long distance away from Singapore which is in second position and the United Kingdom in the first place, adds the provider of treasury messaging services.
“We’ve been following the renminbi developments in Taiwan very closely”, says Lisa O’Connor, RMB Director at Swift. “These are not surprising growth figures given the historic and increasing level of direct activity between the Chinese mainland and Taiwan. Domestic companies in Taiwan are now able to issue renminbi-denominated bonds.”
“In February, the Taipei branch of Bank of China was assigned as the local renminbi clearing bank and the Taiwan Stock Exchange has announced the desire to offer offshore renminbi products,” she added. “All of these positive moves should further support the growth of Taiwan’s renminbi payments.”
On January 25, the Bank of China Taipei signed an agreement with the People’s Bank of China (PBoC) to become the official renminbi clearing bank for Taiwan and since February 6, banks on the island have been able to conduct renminbi business.
Swift’s RMB Tracker reviewed Taiwan’s potential to become the next major offshore renminbi clearing centre six months ago, saying that post-signing of the memorandum of understanding (Mou) with the PBoC is likely to drive a quicker adoption of the Chinese currency for the nation’s trade.
At that time, Taiwan was in seventh position out of the 131 countries exchange renminbi payments worldwide, with 24% of all payments exchange between Taiwan and China plus Hong Kong made using the Chinese currency.
Additionally, offshore renminbi deposits in Taiwan could reach Rmb100 billion (US$16.1 billion) by the end of 2013 as banks target retail and corporate accounts, forecasts ANZ. The bank also believes that Taiwan’s Central Bank of the Republic of China (CBC) could set up a swap line with the PBoC totalling Rmb300 billion or above if the nation’s renminbi deposits were to grow to a size comparable to Hong Kong’s.
Launched in September 2011, the Swift RMB Tracker provides monthly reporting on key statistics to understand the progress made by the renminbi towards becoming an international currency.