BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/23
With the yuan’s falling exchange rate, yuan deposits in designated yuan trading and clearing centres outside mainland China (offshore yuan) have diminished. This trend partly reflects the PBoC’s decision last January to impose reserve requirement ratios (RRRs) on offshore yuan deposits in order to calm currency speculation. The PBoC also announced last week that as of July 15, RRRs will be based on average deposits for the quarter rather than deposits at the end of the quarter. By some estimates, the move will further reduce yuan deposits at offshore centres.
The overall readiness of firms and financial institutions to conduct business in yuan has nevertheless improved in recent years. SWIFT figures show that over 1,100 foreign financial institutions (37 % of all financial institutions with payments traffic in China or Hong Kong) already use the yuan.
Yuan deposits in Hong Kong, Singapore, Seoul and Taipei
Sources: Macrobond, BIS, national central banks and BOFIT
(*Singapore data available on a quarterly basis up to 2016Q1)