China, the world’s second largest economy, has seen its currency climb into fifth place as the world’s most frequently used for payments, according to Swift.
The Yuan took fifth spot at the expense of both the Canadian and Australian dollars, accounting for 2.17% of all international payments in December of last year.
Despite being somewhat off challenging the US dollar, Euro and British Pound, it is gaining fast on the fourth place Japanese Yen, which makes up 2.69% of all transactions.
All in all, the international use of Chinese Yuan for payments grew 20.3% in 12 months.
“It is a great testimony to the internationalization of the yuan and confirms its transition from an 'emerging' to a 'business as usual' payment currency,” said Head of Banking Markets at Swift, Wim Raymaekers.
It’s not only the number of transactions which saw growth in the use of Chinese Yuan, but also the value of transactions, with this growing by some 102% compared to the year before.
Currency experts believe that the use of Chinese Yuan would have grown even further if it was not for government restriction and a lack of expansion in offshore clearing centres for the currency, which work to make Yuan far less easy to trade than other major currencies.
As a direct result, the IMF is expected to update its Special Drawing Rights currency basket later this year, allowing Yuan to be included in the banks official reserves for the first time. So far this basket has only included US dollars, Euros, the British Pound and Yen, and is reviewed every five years.
The next milestone in the use of Chinese Yuan is expected next year when the Bank of International Settlements publish their next report in 2016, a report which when last conduced in 2013 ranked the Yuan 9th in the world.