Banking giant HSBC said the Chinese yuan or renminbi (RMB), is likely to be one of the major currencies of settlement used in the Philippines given the two countries’ expanding trade relations.
In a press briefing on Wednesday, Vina Cheung, global head of Renminbi (RMB) Internationalization at HSBC, said the Philippines shows a huge potential for growth in business transactions settled in the Chinese currency over the next two to three years.
To date, China is the Philippines’ second major trading partner, next to only to the United States.
“I believe that the adoption of the RMB [as a currency of settlement] in the Philippines will be sooner than five years . . . We see the renminbi being fully convertible in the next two to three years,” she said.
Cheung explained that a fully convertible renminbi means the currency’s use in financial transactions will not only cover trade but also investment, funding and financing inside and outside of China.
HSBC sees the possibility of the yuan surpassing the Japanese as the fourth most widely used currency in the world between now and 2016.
“HSBC is projecting the RMB to be the fourth foreign currency in the world. We have seen the momentum in China to liberalize the RMB. There are so many policies in the pipeline that further encourage the use of the RMB,” she said.
Recently, the Society for Worldwide Interbank Financial Telecommunication, an international financial transactions agency, reported that the renminbi has become one of the five most widely used currencies in global payments.
The Chinese currency ranks only behind the US dollar, euro, pound and the yen, in global settlements use, surpassing the Canadian dollar and the Australian dollar.