COFER data until December 2023:
Figure 1: Foreign exchange reserves in JPY as a share of total reserves (blue), AUD (light blue), CAD (green), CNY (red). Source: IMF COFERaccessed 06/18/2024, and calculations by the author.
The CNY peak was 2.6% in the first quarter of 2022, the last being 2.1%.
In terms of daily foreign exchange turnover, the CNY was rising until April 2022.
Figure 2: Share of April foreign exchange turnover in CAN (blue square), AUD (light blue circle), CAD (green triangle), CNY (red square), over 1.00. Source: BIS triennial survey, 2022.
What has happened to turnover since 2022 is an interesting question, particularly given the boom in trade between Russia and China, and therefore invoicing/payment in CNY. Here is the SCRS estimate for RMB billing from 2011 to Q1 2023.
Source: DiPippo and Palazzi (2024).
This last chart shows how the CNY can become used as an international currency, boosted by trade in which China dominates, while losing its popularity as a reserve or vehicle currency. However, the gap between what is happening in the financial sphere and in the commercial sphere reinforces for me the proposal that as long as investors remain wary of the Chinese government’s intentions regarding political risk (including tighter capital controls), further significant gains in the use of the CNY should not be expected as a reserve currency.
