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The renminbi ( ; currency symbol: ¥; ISO code: CNY; abbreviation: RMB), also known as the Chinese yuan, is the official currency of China. The renminbi is issued by the People's Bank of China, the Central bank of China.Article 2, It is the world's as of April 2022.
The yuan () is the basic unit of the renminbi. One yuan is divided into 10 jiao (), and the jiao is further subdivided into 10 fen (). The word yuan is widely used to refer to the Chinese currency generally, especially in international contexts.
On 1 October 2016, the renminbi became the first emerging market currency to be included in the IMF's special drawing rights basket, the basket of currencies used by the IMF as a reserve currency. Its initial weighting in the basket was 10.9%.
The ISO code for the renminbi is CNY, the PRC's country code (CN) plus "Y" from "yuan". Hong Kong markets that trade renminbi at free-floating rates use the unofficial code CNH. This is to distinguish the rates from those fixed by Chinese central banks on the mainland. The abbreviation RMB is not an ISO code but is sometimes used like one by banks and financial institutions.
The currency symbol for the yuan unit is ¥, but when distinction from the Japanese yen is required RMB (e.g. RMB 10,000) or ¥ RMB (e.g. ¥10,000 RMB) is used. However, in written Chinese contexts, the Chinese character for yuan (p=) or, in formal contexts l=round, usually follows the number in lieu of a currency symbol.
Renminbi is the name of the currency while yuan is the name of the primary unit of the renminbi. This is analogous to the distinction between "Pound sterling" and "pound" when discussing the official currency of the United Kingdom. Jiao and fen are also units of renminbi.
In everyday Mandarin Chinese, kuai (l=piece) is usually used when discussing money and "renminbi" or "yuan" are rarely heard. Similarly, Mandarin speakers typically use mao (p=máo) instead of jiao. For example, ¥8.74 might be read as (p=bā kuài qī máo sì) in everyday conversation, but read (p=bā yuán qī jiǎo sì fēn) formally.
Renminbi is sometimes referred to as the "redback", a play on "greenback", a slang term for the US dollar.
The renminbi was introduced by the People's Bank of China in December 1948, about a year before the establishment of the People's Republic of China. It was issued only in paper form at first, and replaced the various currencies circulating in the areas controlled by the Communists. One of the first tasks of the new government was to end the hyperinflation that had plagued China in the final years of the Kuomintang (KMT) era. That achieved, a revaluation occurred in 1955 at the rate of 1 new yuan = 10,000 old yuan.
In 2019, the People's Bank of China released an updated edition of the fifth series of renminbi banknotes and coins. The update included new versions of the ¥50, ¥20, ¥10, and ¥1 banknotes, as well as the ¥1, ¥0.5, and ¥0.1 coins. These featured improved security features, enhanced printing quality, and brighter coloration to combat counterfeiting and improve recognizability. Notably, the ¥100 banknote from the 2015 issue remained unchanged in this release.
As the Chinese Communist Party took control of ever larger territories in the latter part of the Chinese Civil War, its People's Bank of China began to issue a unified currency in 1948 for use in Communist-controlled territories. Also denominated in yuan, this currency was identified by different names, including "People's Bank of China banknotes" (; from November 1948), "New Currency" (; from December 1948), "People's Bank of China notes" (; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or " renminbi", from June 1949.
In the early 2020s, China launched the digital renminbi, also known as the digital yuan or e-CNY, a central bank digital currency (CBDC) developed by the People's Bank of China. Pilot programs began in 2020 in cities such as Shenzhen, Suzhou, and Chengdu. By 2023, e-CNY had been integrated into a wide range of applications, including public transportation, government subsidies, retail payments, and cross-border trials. The digital yuan is intended to enhance payment system resilience, offer an alternative to private payment platforms like Alipay and WeChat Pay, and support financial inclusion.
The most important move to a market-oriented exchange rate was an easing of controls on trade and other current account transactions, as occurred in several very early steps. In 1979, the State Council approved a system allowing exporters and their provincial and local government owners to retain a share of their foreign exchange earnings, referred to as foreign exchange quotas. At the same time, the government introduced measures to allow retention of part of the foreign exchange earnings from non-trade sources, such as overseas remittances, port fees paid by foreign vessels, and tourism.
As early as October 1980, exporting firms that retained foreign exchange above their own import needs were allowed to sell the excess through the state agency responsible for the management of China's exchange controls and its foreign exchange reserves, the State Administration of Exchange Control. Beginning in the mid-1980s, the government sanctioned foreign exchange markets, known as swap centres, eventually in most large cities.
The government also gradually allowed market forces to take the dominant role by introducing an "internal settlement rate" of ¥2.8 to 1 US dollar which was a devaluation of almost 100%.
In the late 1980s and early 1990s, China worked to make the renminbi more convertible. Through the use of swap centres, the exchange rate was eventually brought to more realistic levels of above ¥8/US$1 in 1994 and the FEC was discontinued. It stayed above ¥8/$1 until 2005 when the renminbi's peg to the dollar was loosened and it was allowed to appreciate.
As of 2013, the renminbi is convertible on current accounts but not . The ultimate goal has been to make the renminbi fully convertible. However, partly in response to the Asian financial crisis in 1998, China has been concerned that the Chinese financial system would not be able to handle the potential rapid cross-border movements of hot money, and as a result, as of 2012, the currency trades within a narrow band specified by the Chinese central government.
Following the internationalization of the renminbi, on 30 November 2015, the IMF voted to designate the renminbi as one of several main world currencies, thus including it in the basket of special drawing rights. The renminbi became the first emerging market currency to be included in the IMF's SDR basket on 1 October 2016. The other main world currencies are the dollar, the euro, Pound sterling, and the Japanese yen.
The PBOC has filed more than 80 patents surrounding the integration of a digital currency system, choosing to embrace the blockchain technology. The patents reveal the extent of China's digital currency plans. The patents, seen and verified by the Financial Times, include proposals related to the issuance and supply of a central bank digital currency, a system for interbank settlements that uses the currency, and the integration of digital currency wallets into existing retail bank accounts. Several of the 84 patents reviewed by the Financial Times indicate that China may plan to adjust the supply of a central bank digital currency based on certain triggers, such as loan . Other patents are focused on building digital currency Smart card or digital currency wallets that banking consumers could potentially use, which would be linked directly to their bank accounts. The patent filings also point to the proposed 'tokenomics' being considered by the DCEP working group. Some patents show plans towards programmed inflation control mechanisms. While the majority of the patents are attributed to the PBOC's Digital Currency Research Institute, some are attributed to state-owned corporations or subsidiaries of the Chinese central government.
Uncovered by the Chamber of Digital Commerce (an American non-profit advocacy group), their contents shed light on Beijing's mounting efforts to digitise the renminbi, which has sparked alarm in the West and spurred central bankers around the world to begin exploring similar projects. Some commentators have said that the U.S., which has no current plans to issue a government-backed digital currency, risks falling behind China and risking its dominance in the global financial system. Victor Shih, a China expert and professor at the University of California San Diego, said that merely introducing a digital currency "doesn't solve the problem that some people holding renminbi offshore will want to sell that renminbi and exchange it for the dollar", as the dollar is considered to be a safer asset. Eswar Prasad, an economics professor at Cornell University, said that the digital renminbi "will hardly put a dent in the dollar's status as the dominant global reserve currency" due to the United States' "economic dominance, deep and liquid capital markets, and still-robust institutional framework". The U.S. dollar's share as a reserve currency is above 60%, while that of the renminbi is about 2%.
In April 2020, The Guardian reported that the digital currency e-RMB had been adopted into multiple cities' monetary systems and "some government employees and public servants will receive their salaries in the digital currency from May. The Guardian quoted a China Daily report which stated "A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption." There were talks of testing out the digital renminbi in the Beijing Winter Olympics in 2022, but China's overall timetable for rolling out the digital currency was unclear.
The denomination of each banknote is printed in simplified written Chinese. The numbers themselves are printed in financial Chinese numeral characters, as well as Arabic numerals. The denomination and the words "People's Bank of China" are also printed in Mongolian, Standard Tibetan, Uyghur language and Standard Zhuang on the back of each banknote, in addition to the boldface Hanyu Pinyin "Zhongguo Renmin Yinhang" (without tones). The right front of the note has a tactile representation of the denomination in Chinese Braille starting from the fourth series. See corresponding section for detailed information.
The fen and jiao denominations have become increasingly unnecessary as prices have increased. Coins under ¥0.1 are used infrequently. Chinese retailers tend to avoid fractional values (such as ¥9.99), opting instead to round to the nearest yuan (such as ¥9 or ¥10).
In 1991, a new coinage was introduced, consisting of an aluminium ¥0.1, brass ¥0.5 and nickel-clad steel ¥1. These were smaller than the previous jiǎo and yuán coins and depicted flowers on the obverse and the national emblem on the reverse. Issuance of the aluminium ¥0.01 and ¥0.02 coins ceased in 1991, with that of the ¥0.05 halting in 1994. The small coins were still struck for annual uncirculated Coin set in limited quantities, and from the beginning of 2005, the ¥0.01 coin got a new lease on life by being issued again every year since then up to present.
New designs of the ¥0.1, ¥0.5 (now brass-Plating steel), and ¥1 (nickel-plated steel) were again introduced in between 1999 and 2002. The ¥0.1 was significantly reduced in size, and in 2005 its composition was changed from aluminium to more durable nickel-plated steel. An updated version of these coins was announced in 2019. While the overall design is unchanged, all coins including the ¥0.5 are now of nickel-plated steel, and the ¥1 coin was reduced in size.
The frequency of usage of coins varies between different parts of China, with coins typically being more popular in urban areas (with 5-jiǎo and 1-yuán coins used in vending machines), and small notes being more popular in rural areas. Older fēn and large jiǎo coins are uncommonly still seen in circulation, but are still valid in exchange.
Interest rate and green bonds
In May 2023, RMB interest rate swaps was launched. In June 2023, under the Government Green Bond Programme, the Government of the Hong Kong Special Administrative Region of the People's Republic of China (HKSAR) announced a green bonds offering, of approximately US$6 billion denominated in USD, Euro and RMB.
Issuance
As of 2019, renminbi banknotes are available in denominations of ¥0.1, ¥0.5 (1 and 5 jiao), ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. These denominations have been available since 1955, except for the ¥20 notes (added in 1999 with the fifth series) ¥50 and ¥100 notes (added in 1987 with the fourth series). Coins are available in denominations from ¥0.01 to ¥1. Thus some denominations exist in both coins and banknotes. On rare occasions, larger yuan coin denominations such as ¥5 have been issued to commemorate events but use of these outside of collecting has never been widespread.
Coins
In 1953, aluminium ¥0.01, ¥0.02, and ¥0.05 coins began being struck for circulation, and were first introduced in 1955. These depict the national emblem on the obverse (front) and the name and denomination framed by wheat stalks on the reverse (back). In 1980, brass ¥0.1, ¥0.2, and ¥0.5 and cupro-nickel ¥1 coins were added, although the ¥0.1 and ¥0.2 were only produced until 1981, with the last ¥0.5 and ¥1 issued in 1985. All jiǎo coins depicted similar designs to the fēn coins while the yuán depicted the Great Wall of China.
Banknotes
As of 2023, there have been five series of renminbi banknotes issued by the People'
accessed 23 Sept 2023.Schwartz, Peter J. 'The Ideological Antecedents of the First-Series Renminbi Worker-and-Peasant Banknote or What Mao Tse-tung May Have Owed to Dziga Vertov'. Transcultural Studies, Jul 2014.Tim F. Liao and Cuntong Wang, 'The Changing Face of Money: Forging Collective Memory with Chinese Banknote Designs', China Review vol. 18, no. 2, Special themed section: Frontiers and Ethnic Groups in China (May 2018): 87–120.Helen Wang, 'Mao on Money', East Asia Journal vol.1, no.2 (2004): 86–97.
An orange polymer banknote, commemorating the new millennium was issued in 2000 with a face value of ¥100. This features a Chinese dragon on the obverse and the reverse features the China Millennium monument (at the Center for Cultural and Scientific Fairs).
For the 2008 Beijing Olympics, a green ¥10 note was issued featuring the Bird's Nest Stadium on the front with the back showing a classical Olympic discus thrower and various other athletes.
On 26 November 2015, the People's Bank of China issued a blue ¥100 commemorative note to honour China's aerospace science and technology. China new 100-yuan aerospace commemorative note reported for 26.11.2015 introduction BanknoteNews.com. 6 November 2015. Retrieved on 18 November 2015. 中国人民银行公告〔2015〕第33号 The People's Bank of China (www.pbc.gov.cn). Retrieved on 18 November 2015.
In commemoration of the 70th anniversary of the Renminbi, the People's Bank of China issued 120 million ¥50 banknotes on 28 December 2018.
In recognition of the imminent 2022 Winter Olympics, the People's Bank of China issued ¥20 commemorative banknotes in both paper and polymer in December 2021.
In recognition of the imminent 2024 and 2025 Chinese New Year celebrations, the People's Bank of China issued ¥20 commemorative banknotes in polymer.
The renminbi reached a record high exchange value of ¥6.0395 to the US dollar on 14 January 2014. Chinese leadership have been raising the yuan to tame inflation, a step U.S. officials have pushed for years to lower the massive trade deficit with China.Yahoo Finance, Dollar extends slide on views of low US rates . Retrieved 29 April 2011. Strengthening the value of the renminbi also fits with the Chinese transition to a more consumer-led economic growth model.
In 2015 the People's Bank of China again devalued their country's currency. , the exchange rate for US$1 is ¥6.38.
However, the peg was reinstituted unofficially when the financial crisis hit: "Under intense pressure from Washington, China took small steps to allow its currency to strengthen for three years starting in July 2005. But China 're-pegged' its currency to the dollar as the financial crisis intensified in July 2008."
On 19 June 2010, the People's Bank of China released a statement simultaneously in Chinese and English claiming that they would "proceed further with reform of the renminbi exchange rate regime and increase the renminbi exchange rate flexibility". Further reform of the RMB exchange rate regime and enhancing the RNM exchange rate flexibility The news was greeted with praise by world leaders including Barack Obama, Nicolas Sarkozy and Stephen Harper. The PBoC maintained there would be no "large swings" in the currency. The renminbi rose to its highest level in five years and markets worldwide surged on Monday, 21 June following China's announcement.
In August 2015, Joseph Adinolfi, a reporter for MarketWatch, reported that China had re-pegged the renminbi. In his article, he narrated that "Weak trade data out of China, released over the weekend, weighed on the currencies of Australia and New Zealand on Monday. But the yuan didn't budge. Indeed, the Chinese currency, also known as the renminbi, has been remarkably steady over the past month despite the huge selloff in China's stock market and a spate of disappointing economic data. Market strategists, including Simon Derrick, chief currency strategist at BNY Mellon, and Marc Chandler, head currency strategist at Brown Brothers Harriman, said that is because China's policy makers have effectively re-pegged the yuan. "When I look at the dollar-renminbi right now, that looks like a fixed exchange rate again. They've re-pegged it," Chandler said."
On 10 April 2008, it traded at ¥6.9920 per US dollar, which was the first time in more than a decade that a dollar had bought less than ¥7, and at ¥11.03630 per euro.
Beginning in January 2010, Chinese and non-Chinese citizens have an annual exchange limit of a maximum of US$50,000. Exchanges within this limit require only a passport or Chinese ID and no additional documentation showing the purpose of the exchange. Currency exchange transactions are centrally registered. The maximum dollar withdrawal is $10,000 per day, the maximum purchase limit of US dollars is $500 per day. This stringent management of the currency leads to a bottled-up demand for exchange in both directions. It is viewed as a major tool to keep the currency peg, preventing inflows of "hot money".
A shift of Chinese reserves into the currencies of their other trading partners has caused these nations to shift more of their reserves into dollars, leading to no great change in the value of the renminbi against the dollar.
The People's Bank of China lowered the renminbi's daily fix to the US dollar by 1.9 per cent to ¥6.2298 on 11 August 2015. The People's Bank of China again lowered the renminbi's daily fix to the US dollar from ¥6.620 to ¥6.6375 after Brexit on 27 June 2016. It had not been this low since December 2010.
In June 2009 the Chinese officials announced a pilot scheme where business and trade transactions were allowed between limited businesses in Guangdong province and Shanghai, and only counterparties in Hong Kong, Macau, and select ASEAN nations. Proving a success, the program was further extended to 20 Chinese provinces and counterparties internationally in July 2010, and in September 2011 it was announced that the remaining 11 Chinese provinces would be included.
In steps intended to establish the renminbi as an international reserve currency, China has agreements with Russia, Vietnam, Sri Lanka, Thailand, and Japan, allowing trade with those countries to be settled directly in renminbi instead of requiring conversion to US dollars, with Australia and South Africa to follow soon. In September 2023, the Renminbi passed the euro as the second most utilized currency in international trade, having tripled in the last three years.Melissa Lawford. Reporter for The Telegraph. (24 December 2023). "How Xi Jinping is challenging dollar dominance with landmark Saudi deal". Yahoo Finance website Retrieved 25 December 2023.
To meet IMF requirements, China gave up some of its tight control over the currency.
Countries that are left-leaning in the political spectrum had already begun to use the renminbi as an alternative reserve currency to the United States dollar; the Central Bank of Chile reported in 2011 to have US$91 million worth of renminbi in reserves, and the president of the Central Bank of Venezuela, Nelson Merentes, made statements in favour of the renminbi following the announcement of reserve withdrawals from Europe and the United States.
In Africa, the central banks of Ghana, Nigeria, and South Africa either hold renminbi as a reserve currency or have taken steps to purchase bonds denominated in renminbi. The "Report on the Internationalization of RMB in 2020", which was released by the People's Bank of China in August 2020, said that renminbi's function as international reserve currency has gradually emerged. In the first quarter 2020, the share of renminbi in global foreign exchange reserves rose to 2.02%, a record high. As of the end of 2019, the People's Bank of China has set up renminbi clearing banks in 25 countries and regions outside of mainland China, which has made the use of renminbi more secure and transaction costs have decreased.
]] The two special administrative regions, Hong Kong and Macau, have their own respective currencies, according to the "one country, two systems" principle and the of the two territories. Therefore, the Hong Kong dollar and the Macanese pataca remain the legal tenders in the two territories, and the renminbi, although sometimes accepted, is not legal tender. Banks in Hong Kong allow people to maintain accounts in RMB. Because of changes in legislation in July 2010, banks around the world offer foreign currency accounts for deposits in Chinese renminbi.
The renminbi had a presence in Macau even before the 1999 return to the People's Republic of China from Portugal. Banks in Macau can issue credit cards based on the renminbi, but not loans. Renminbi-based credit cards cannot be used in Macau's .
The government of Taiwan believes that wide usage of the renminbi would create an Black market and undermine its sovereignty. Tourists are allowed to bring in up to ¥20,000 when visiting Taiwan. These renminbi must be converted to Taiwanese currency at trial exchange sites in Matsu Islands and Kinmen. The Chen Shui-bian administration insisted that it would not allow full convertibility until the mainland signs a bilateral foreign exchange settlement agreement, though president Ma Ying-jeou, who served from 2008 to 2016, sought to allow full convertibility as soon as possible.
The renminbi circulates in some of China's neighbors, such as Pakistan, Mongolia and northern Thailand. Cambodia welcomes the renminbi as an official currency and Laos and Myanmar allow it in border provinces such as Wa State and Kokang and economic zones like Mandalay. Though unofficial, Vietnam recognizes the exchange of the renminbi to the đồng. In 2017 ¥215 billion was circulating in Indonesia. In 2018 a Bilateral Currency Swap Agreement was made by the Bank of Indonesia and the Bank of China which simplified business transactions, and in 2020 about 10% of Indonesia's global trade was in renminbi.
Since 2007, renminbi-nominated bonds have been issued outside mainland China; these are colloquially called dim sum bonds. In April 2011, the first initial public offering denominated in renminbi occurred in Hong Kong, when the Chinese property investment trust Hui Xian REIT raised ¥10.48 billion ($1.6 billion) in its IPO. Beijing has allowed renminbi-denominated financial markets to develop in Hong Kong as part of the effort to internationalise the renminbi. There is limited (under 1%) issuing of renminbi bonds in Indonesia.
Other renminbi markets include the dollar-settled non-deliverable forward (NDF), and the trade-settlement exchange rate (CNT).
Note that the two CNTs mentioned above are different from each other.
Other markets
Since currency flows in and out of mainland China are still restricted, renminbi traded in off-shore markets, such as the Hong Kong market, can have a different value to renminbi traded on the mainland. The offshore RMB market is usually denoted as CNH, but there is another renminbi interbank and spot market in Taiwan for domestic trading known as CNT.
See also
Notes
Further reading
External links
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