The Chinese yuan has leaped over the Australian, Canadian and Swiss currencies to become the fifth most traded currency in the world, according to the Bank for International Settlements (BIS).
The Chinese currency was involved in 7% of all trades in 2022, compared with 4% three years ago, the Basel-based BIS said in its triennial Central Bank Survey report on Thursday. Total daily trades over the period rose 14% to $7.5 trillion.
The US dollar maintained its decade-long place as the world’s most traded currency, accounting for one side of 88% of all transactions. The euro, yen and pound also held their spots in the top four.
The yuan is becoming a more important global currency as China takes steps to open its financial markets. This is reflected in an increase in yuan cross-border settlements as well as a higher share of yuan among global foreign-exchange reserves.
The BIS collected data from more than 1,200 banks and dealers in 52 jurisdictions. Russia, which accounted for less than 1% of the global total, was excluded this year and Dubai was included for the first time.
The report also showed that the UK’s stronghold on global currency trading is weakening, allowing the US, Singapore and other European hubs to grab more market share.
London’s share of the global market dropped to 38% from 43% in 2019. The US is second at 19%, up from 17% previously, the report said.
London has been the world’s currency hub since the 1980s; its importance growing along with the City’s role in global finance in part because of its location between Asian and US time zones. But since the UK’s decision to exit the European Union in 2016, banks have been moving trading floors to Paris and Frankfurt.
Germany and France have seen volumes edge higher, with the former accounting for 1.9% of overall daily trade and the latter 2.2%. This process could accelerate as EU regulators step up pressure on lenders to increase staffing within the bloc.
Singapore, where authorities launched a push to grab a larger share of the market in 2019 by offering incentives and building infrastructure, has seen its share jump to 9.4% from 7.7%. Activity in Hong Kong and Japan fell to 7% and 4%, respectively.