Since the pilot launch of the cross-border renminbi (RMB) trade settlement in 2008, RMB’s internationalisation has seemed inexorable. Yet recently there have been signs that this progress may be interrupted by delays in the implementation of the China International Payments System (CIPS) and obstacles to straight-through processing.</p> By any measure, the internationalisation of the RMB has been striking. In little more than five years, the currency has gone from almost a footnote in international trade to the seventh most popular payment currency, accounting for 1.47% of global payments and the second most popular currency used in trade finance. The pace of growth is similarly if not more impressive in the short term: as of May 2014, RMB payment volumes globally had grown by more than 120% year-to-date, compared with overall payment market growth of just 11%. Similar activity growth is apparent in some offshore RMB centres. For instance, RMB clearing volumes in Hong Kong through the local Clearing House Automated Transfer System (CHATS) have already overtaken Hong Kong dollar activity. Finally, explicit measures of globalisation have continued to rise: Standard Chartered's RMB Globalisation Index (RGI) reached 1,888 in June, a rise of 75.8% year-on-year and 0.3% month-on-month.</p> This growth is even more impressive when one considers some of the practical obstacles associated with China-bound payments. While these were historically primarily associated with US dollar payments, many of them apply equally to the RMB. For example, the sheer size of China, combined with the fact that many cities and provinces share remarkably similar names, provides ample scope for misrouting. At the same time, a slight misspelling of the beneficiary name can also have far reaching consequences, since large numbers of people have the same family name.</p> In addition, payments into China typically arrive via SWIFT messages populated in English, which then have to be translated before onward transmission to the beneficiary. Tracking these payments within China is also problematic because overseas banks often find that obtaining accurate status information on transactions from Chinese banks is difficult.</p> A more desirable long-term alternative is to have a payment infrastructure that is sufficiently standardised so that these issues do not arise in the first place.</p> A widespread assumption for some time has been that CIPS would fulfil this role.</p> This is an article excerpt. View the full article</a>.</p> Article contributed by Standard Chartered</em>.</p> </p>