Financial Industry Agrees Offshore RMB Guidelines
As international use of the Chinese currency grew exponentially over the past 18 months, financial institutions around the world identified important issues around efficient processing of payments, treasury and securities transactions using the renminbi (RMB). After initial discussions by groups of institutions in Hong Kong actively involved in settling offshore RMB across securities and transaction banking markets, the industry has now defined a new set of guidelines related to the usage of ISO 15022 and MT messages for efficient processing of offshore CNY transactions.
The document is now available for public use by any financial institution that wants to benefit from guidelines defined by the industry in Hong Kong, the largest offshore centre, where 78% of all RMB payments transactions are made.
Patrick de Courcy, head of markets and initiatives Asia-Pacific at SWIFT, said: “Basically, the industry concerns were with straight-through processing of offshore Chinese yuan instruments, because there is only one settlement currency for the Chinese yuan whether it is onshore or offshore and that is CNY. Industry participants, however, need to differentiate onshore versus offshore settled CNY in their internal systems and between counterparties. The Hong Kong industry asked SWIFT to respond by facilitating industry agreement around a standardised approach towards counterparty communication and this has resulted in market practice guidelines. Given that nearly 80% of RMB payments happen in Hong Kong, it was natural that the groups started here.”
Three working groups comprising 24 institutions put together the guidelines for their market segments, which then went to the global community through SWIFT for comments.