China hedges its bets to make yuan a global favourite

Mettis Global reported that China is pushing to internationalise the yuan beyond trade settlement, aiming to build a wider financial ecosystem covering investment, financing, hedging and reserve use. Citing Bloomberg, the report said Beijing is developing the infrastructure needed to expand the currency's role in global financing and strengthen its reserve currency standing. Planned steps include more investment products, derivatives and hedging tools, along with simpler issuance of dim sum and panda bonds.

The yuan now ranks second among currencies in global trade finance with a 9.14% share by value, although the US dollar accounts for 80.68%. That share is nearly double the euro's 4.79%, while the Japanese yen follows at 1.22%. Hong Kong is also planning larger and more frequent government bond sales to build a yield curve for the currency, and is examining short-term yuan debt instruments.

China's cross-border yuan payment network is also expanding, with annual transaction value reaching CN¥180.2tr (US$26.9tr) in 2025, almost four times the level of a decade earlier. Tommy Wu of Standard Chartered said the Cross-Border Interbank Payment System could expand further, along with cross-border QR code payments with Asean countries. Tommy Xie of OCBC added that institutions are unlikely to hold large yuan balances without suitable duration, liquidity and risk management tools.