First Time This Year
Among the currencies used in global trade this year, the Chinese yuan has emerged as the second most widely used currency after the U.S. dollar, reflecting its substantial presence. The assessment suggests that the yuan is rapidly gaining momentum as a potential key currency in the future.
During the 9th Anniversary Conference of Seoul’s Won-Yuan Direct Trading Market hosted by the International Financial Center (IFC) and the Bank of Communications (BOC) of China on Dec. 11, Lee Chi-hoon, a research fellow at the IFC, said, “This year, global yuan settlements and trade finance have recorded the highest levels in history.”
In fact, the yuan has seen a sharp increase of 21.5% in payment usage this year, driven by strengthened cooperation between China and the Middle East. In terms of trade finance ratio, the yuan surpassed the euro for the first time in September, securing the second position.
Lee anticipated that the gross domestic product of China would surpass that of the United States by 2037. This outlook is based on the growth supported by Chinese consumption, the service sector, and investments in advanced industries. However, it is speculated that the yuan will coexist with the U.S. dollar in the long term rather than immediately surpassing the U.S. dollar and becoming the key currency.
Lee stated, “It is not an unrealistic prediction that the yuan could become the key currency, and it is possible. However, there are still too many shortcomings when considering stable exchange rates or criteria as a settlement currency for the yuan to become the key currency.”
Professor Ku Ki-bo of global commerce at Soongsil University said, “The yuan surpassing the euro is the first step before surpassing the U.S. dollar. When considering the growth rate, there is no doubt that the yuan is progressing rapidly.”
It has been pointed out that the accessibility of the yuan for market participants remains low while the status of the yuan is rising. Baek Bong-hyun, a deputy head of the international general management team at the Bank of Korea, said, “The demand for the yuan by companies is still significant, but accessibility is constrained. Given the dual exchange rate system of the won-yuan, which tends to fluctuate rapidly, market participants such as foreign exchange dealers are less actively engaged.”