Geographic Spread of Currency Trading: The Renminbi and Other EM Currencies

18 Pages Posted: 9 Sep 2019

See all articles by Yin-Wong Cheung

Yin-Wong Cheung

City University of Hong Kong - Department of Economics & Finance; University of California, Santa Cruz - Department of Economics; University of California at Santa Cruz - Department of Economics

Robert N. McCauley

Bank for International Settlements (BIS)

Chang Shu

Chief Asia Economist, Bloomberg

Date Written: August 27, 2019

Abstract

This paper studies the ongoing diffusion of renminbi trading across the globe, the first such research of an international currency. It analyses the distribution in offshore renminbi trading in 2013 and 2016, using comprehensive data from the Triennial Central Bank Survey of Foreign Exchange and Over-the-Counter Derivatives Market Activity. In 2013, Asian centres favoured by the policy of renminbi internationalisation had big shares in global renminbi trading. In the following three years, renminbi trading seemed to converge to the spatial pattern of all currencies, with a half-life of seven to eight years. The previously most traded emerging market currency, the Mexican peso, shows a similar pattern, although it is converging to the global norm more slowly. Three other major emerging market currencies show a qualitatively similar evolution in the geography of their offshore trading. Overall the renminbi's internationalisation is tracing an arc from the influence of administrative measures to the working of market forces.

Keywords: international currency, FX turnover, renminbi internationalisation, international financial centre

JEL Classification: C24, F31, F33, G15, G18

Suggested Citation

Cheung, Yin-Wong and McCauley, Robert N. and Shu, Chang, Geographic Spread of Currency Trading: The Renminbi and Other EM Currencies (August 27, 2019). BIS Working Paper No. 806. Available at SSRN: https://ssrn.com/abstract=3448723

Yin-Wong Cheung (Contact Author)

City University of Hong Kong - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

University of California, Santa Cruz - Department of Economics ( email )

435 Engineering 2
Santa Cruz, CA 95064
United States
831-459-4247 (Phone)
831-459-5077 (Fax)

University of California at Santa Cruz - Department of Economics ( email )

1156 High Street
Santa Cruz, CA 95064
United States

Robert N. McCauley

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Chang Shu

Chief Asia Economist, Bloomberg ( email )

731 Lexington Avenue
New York, NY 10022
United States

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