Chinese Yuan Beats Euro To Become Second Most Used Currency In Global Payments System After US Dollar

New Delhi: In a significant milestone to internationalise its currency, China’s Yuan has surpassed the Euro to become the world’s second-most used currency in SWIFT trade settlements, according to data from the international SWIFT system.

As of September 2023, the Yuan accounted for 5.8% of international payments, up from 4.82% in August. This is the highest share the Yuan has held in the last five years. Despite this increase, the US dollar remains the dominant currency in global trade, with an 84.15% share in September, a slight increase from 83.95% in August, India Today reported.

The Euro now ranks third in international payments, with its share decreasing to 5.43% in September from 6.43% in August. The Japanese Yen and the Saudi Rial follow, ranking fourth and fifth, respectively.

Despite the Yuan’s share of global payments remaining small compared to the size of China’s economy, it has seen a steady increase from 1.81% about five years ago.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a Belgian cooperative society that provides services related to the execution of financial transactions and payments between banks worldwide. The US dollar and the Euro have traditionally dominated SWIFT payments, making up more than seven out of 10 payments in 2023.

The rise of the Yuan in international trade settlements is seen as a reflection of China’s growing economic power and its efforts to make the yuan a global reserve currency. However, the Yuan’s share is still negligible compared to the dollar’s 46.6%, the report added.