RMB Internationalization and What It Means for Treasury Management

The RMB's new standing

RMB internationalisation did not happen overnight, but the pace of change in the past two years warrants a recalibration of how treasury functions think about China's currency. The milestones are now structural rather than symbolic.

Contributing Advisor

Ivy Gu

Senior Manager, Audit

Three foundational developments define the current landscape:

• The Cross-Border Interbank Payment System (CIPS), China's alternative to SWIFT for RMB transactions, now spans 119 countries with 1,629 institutional participants — up from 109 countries just two years prior. CIPS processed RMB 175 trillion ($24.6 trillion) in 2024, a 43 percent year-on-year increase, with 53 percent of surveyed financial institutions expecting it to handle more than 40 percent of their RMB transactions by 2025 (CCB / The Asian Banker, RMB Internationalisation Report 2025).
• The RMB has consolidated its position as the fourth most-used currency for global payments by value, according to SWIFT's RMB Tracker. By February 2025, its share stood at 4.33 percent of global payment value — more than double the 2023 average — and it ranked second only to the USD in global trade finance within the SWIFT network, at approximately 7.6 percent share as of mid-2025.
• The Bank of International Settlements' (BIS) 2024 triennial survey confirmed the RMB as the world's fifth-largest FX trading currency, with its daily turnover share rising to 8.5 percent — an increase of 1.5 percentage points from 2022, the largest rise among all currencies tracked.

These are not incremental gains. They represent a qualitative shift in the RMB's role from a currency used primarily in bilateral China trade to one embedded in multilateral financial flows across the Global South, the Middle East, Southeast Asia, and increasingly, Europe.

The geopolitical engine behind the numbers

Understanding the data without its geopolitical context risks misreading the trajectory. The RMB's rise is not a purely market-driven phenomenon. It is being actively accelerated by structural changes in global trade geography and the strategic interests of multiple state actors.

China's trade pivot toward the Global South is particularly consequential. In 2024, Global South economies accounted for 44 percent of China's exports — up from 35 percent in 2015 — and contributed 54 percent of its overall trade surplus. As these trade corridors deepen, the demand for RMB settlement follows organically. A Brazilian soy exporter or a Saudi energy supplier that routinely transacts with Chinese buyers has an increasingly rational case for holding and invoicing in RMB.

Separately, the post-2022 sanctions landscape — shaped by the freezing of Russian central bank assets following the Ukraine conflict — catalysed de-dollarisation sentiment among a broader set of sovereign actors. For many emerging market central banks, the episode served as a vivid illustration of the systemic risk embedded in dollar dependency. The PBOC has responded by expanding its bilateral currency swap network to over 40 central banks as of February 2025, providing liquidity backstops in local currency pairs that bypass the dollar entirely.

China's selective and incremental approach to RMB internationalisation — prioritising trade-based adoption over full capital account liberalisation — is best understood as a deliberate hedge against what some Chinese strategists have termed "financial war" risk: the vulnerability of dollar-denominated financial infrastructure to geopolitical coercion (Taylor, 2025, Sage Journals). For treasury professionals at multinational corporations, this means the RMB will continue to expand its footprint in ways that do not necessarily require China to liberalise fully — making strategic engagement non-optional for many organisations.

Five treasury implications that demand attention

FX exposure is growing

Organisations with supply chains, procurement relationships, or distribution networks touching China, ASEAN, or the Middle East are accumulating RMB exposure in ways that may not be fully visible in legacy treasury systems. As Chinese counterparties increasingly prefer RMB invoicing — cross-border RMB receipts and payments reached RMB 64 trillion in 2024, up sharply from the prior year — the implicit currency risk embedded in supplier contracts and receivables portfolios is increasing.

The critical nuance for hedging strategy is the distinction between CNY (onshore renminbi) and CNH (offshore renminbi traded in Hong Kong and international markets). Both represent the same currency but operate under different regulatory regimes and can diverge in pricing and liquidity, particularly during periods of market stress. State Street Global Advisors has noted that CNH-based hedging has persistently underperformed CNY-based hedging from 2023 to 2025 — a trend that has accelerated the migration of performance-sensitive institutional investors toward onshore CNY instruments through channels such as CIBM Direct and Bond Connect.

Payment infrastructure gaps are becoming a competitive liability

CIPS is no longer a niche system. With 1,629 participants across 119 countries, organisations whose banking partners lack CIPS connectivity are increasingly exposed to settlement friction, higher intermediary costs, and reduced transaction visibility for RMB flows. For corporate treasurers managing large intra-group flows with Chinese subsidiaries, or those settling commodities trades in RMB, this is an operational concern.

A practical audit question for treasury teams: does your principal transaction bank offer direct CIPS participation, or is it routing through correspondent banks? The difference in settlement time, cost, and transparency is material.

Liquidity management in China is becoming more viable

One of the most persistent frustrations for multinational treasury functions has been the effective trapping of liquidity within China. Historically, capital controls made it difficult to incorporate Chinese subsidiaries into global cash pooling structures. This is changing, though incrementally.

The PBOC has expanded cross-border RMB lending facilities, allowing multinationals to access subsidiary liquidity for up to twelve months. Bank of China's 2025 White Paper on RMB Internationalisation highlights that the PBOC has piloted integrated domestic-foreign currency capital pool programmes across ten provinces and municipalities — including Beijing, Shanghai, Jiangsu, Zhejiang, and Guangdong — with the express aim of reducing financing costs and improving cross-border cash management efficiency for large multinationals.

Organisations with significant China operations should be actively reviewing whether their treasury structures are current with these liberalisation steps. Trapped cash is expensive cash.

RMB-denominated assets deserve a place in the investment policy statement

China's onshore bond market is now the world's second-largest, with over USD 25 trillion in outstanding debt. Foreign holdings of onshore Chinese bonds reached approximately RMB 4.2 trillion by end-2024. For organisations with material surplus cash or treasury investment portfolios, Chinese Government Bonds (CGBs) and Panda Bonds offer a compelling diversification argument: historically low volatility, low correlation with USD and EUR-denominated assets, and yields that have been competitive versus developed market equivalents on a risk-adjusted basis.

The caveat is hedging cost and complexity. Currency hedging remains essential given residual capital controls and the RMB's managed-float regime. However, as CIBM Direct access deepens and onshore derivatives markets develop, the operational barriers to effective hedging are declining.

The Digital Yuan and mBridge are medium-term wildcards

Two developments at the frontier of RMB internationalisation deserve monitoring rather than immediate action, but should feature in scenario planning:

• The mBridge multi-CBDC platform reached its Minimum Viable Product (MVP) stage in 2024, enabling real-value cross-border central bank digital currency transactions between participating monetary authorities. mBridge could, in time, provide an alternative settlement rail for sovereign and institutional RMB transactions that bypasses both SWIFT and CIPS entirely.
• The digital yuan (e-CNY) pilot programme has expanded its cross-border trial scope. While adoption at corporate treasury level remains limited, the e-CNY represents a potential vector for programmable money — including smart contract-based trade finance settlement — that could alter FX settlement windows and reconciliation processes.

Neither development will transform treasury operations in the next twelve months. Both will likely be material within five years.

Translating RMB trends into operational priorities

Note: Actions should be prioritised in accordance with individual organisation's China exposure, operating model, and regulatory jurisdiction.

Where the limits still lie

A balanced assessment requires acknowledging what the RMB still cannot offer — and where the structural ceilings remain.

• Capital account convertibility remains incomplete. While trade and current account transactions are relatively liberalised, financial account flows are still subject to regulatory controls. This limits the RMB's appeal as a free-floating reserve currency and constrains the depth of offshore RMB liquidity pools.
• Reserve currency adoption is rising, but slowly. IMF COFER data suggests the RMB accounts for approximately 2.3 percent of global foreign exchange reserves — a significant gain from near-zero a decade ago, but far below the USD (59 percent) and EUR (20 percent). Diversification momentum is real; displacement is not yet.
• Geopolitical concentration risk is a legitimate concern. An organisation that over-indexes on RMB payment infrastructure, RMB bond holdings, and RMB liquidity management is implicitly increasing its exposure to China's regulatory and geopolitical risk profile. Strategic engagement does not mean uncritical dependency.
• Hedging markets remain shallower than G3 equivalents. While onshore derivatives access has improved materially through CIBM Direct and Bond Connect, bid-ask spreads, product breadth, and market depth in RMB hedging instruments do not yet match USD, EUR, or GBP markets.

The strategic posture: engaged, not dependent

The treasury function that ignores RMB internationalisation risks operational and cost disadvantages as the currency's role expands in their counterparty ecosystems. The treasury function that over-engages without appropriate hedging, concentration limits, and scenario planning substitutes one form of risk for another.

The appropriate posture is active, structured engagement. This means:

• Conducting a comprehensive RMB exposure audit across subsidiaries, supply chains, and financial counterparties — including exposures that are currently dollar-denominated but transact with RMB-preferring counterparties.
• Reviewing banking and payment infrastructure to ensure CIPS connectivity, offshore CNH account capability, and access to onshore derivatives through qualified banking partners.
• Updating hedging policy to specifically address CNY/CNH basis risk, and to differentiate treatment of onshore vs offshore instruments.
• Incorporating RMB-denominated assets into treasury investment policy reviews, with clear parameters on concentration limits, duration, and currency hedge requirements.
• Establishing a monitoring framework for PBOC policy evolution, CIPS network expansion, and mBridge/e-CNY developments — rather than treating these as back-burner topics for future budget cycles.