RMB offshore business refers to the RMB deposit business operating outside China.
The offshore market provides offshore financial services: businesses in which both parties to the transaction are non-residents are called offshore financial services.
Before the RMB is fully convertible, there will be a trading market for the RMB flowing out of the country. Only in this way can the development of RMB trade settlement be promoted and guaranteed.
There are four criteria for becoming an offshore RMB center: the existence of a bilateral local currency swap agreement; China opening up the RMB Qualified Foreign Institutional Investor (RQFII) quota; designating an official offshore clearing bank for offshore RMB; mainland China’s state-owned financial institutions or
Government agencies issue RMB bonds in the local (offshore) market.
Extended information Every move in the internationalization of the RMB is crucial to the global market, especially when the US dollar and the euro, the two major weighted currencies of the Special Drawing Rights (SDR), are each restricted by internal economic factors and cannot effectively serve as reserve currencies.
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Against this background, the RMB has successfully entered the basket. If it can become a widely recognized payment currency in the future, it will certainly be able to diversify the risks of the international monetary policy system.
In fact, the Chinese government has been committed to promoting the internationalization of the RMB, including signing currency swap agreements with central banks of various countries, establishing the RMB Cross-border Payment System (CIPS), and gradually opening up domestic capital accounts and launching Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.
In the long run, the above measures will provide various holders with extensive opportunities to use RMB, promote the use of RMB, and promote the development of China's investment market.
Over the past few years, the internationalization of the renminbi has reduced the operating costs of multinational companies doing business in China.
According to observation data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in October 2016, RMB ranked 6th in international payment share and 3rd in trade finance.
Obviously, the "inclusion of the RMB into the basket" will enhance the overall international status of the RMB.