Heavyweight! The first cross-border RMB settlement transaction has been successfully processed!

In recent months, multiple economies around the world have launched intensive new measures to strengthen local currency settlement in cross-border trade and investment.

As the largest economy in Latin America, Brazil allows local currency settlement in bilateral trade with China, further confirming the global trend of "de dollarization".

ICBC Brazil Successfully Handled the First Cross border RMB Settlement Business

On the 12th, according to Xinhua News Agency, Industrial and Commercial Bank of China (Brazil) Co., Ltd. has successfully processed its first cross-border RMB settlement business. Both trading parties no longer use the US dollar as the intermediate currency, demonstrating significant advantages in clearing efficiency and exchange costs.

The person in charge of ICBC in Brazil said that the bank would continue to actively play its advantages as a Brazilian RMB clearing bank in the future, strive to provide convenient, efficient and safe cross-border RMB settlement services for enterprises in both countries, and promote China Brazil economic and trade cooperation to a new level.

In recent years, China Pakistan's economic and trade exchanges have become increasingly close, and the amount of cooperation has continued to grow. The successful implementation of this cross-border RMB settlement business marks that Chinese and Pakistani enterprises have more currency options in trade transactions, which helps to increase the proportion of RMB in China Pakistan trade and investment, and injects new vitality into China Pakistan economic and financial cooperation.

At the beginning of this year, China and Brazil signed a memorandum of cooperation to establish RMB settlement arrangements in Brazil. On February 23, the People's Bank of China issued an announcement authorizing ICBC Brazil to act as the Brazilian RMB clearing bank.

At this point, Industrial and Commercial Bank of China has served as a RMB clearing bank in 11 countries including Singapore, Luxembourg, Qatar, Canada, Thailand, Argentina, Russia, Laos, Kazakhstan, Pakistan, Brazil, and is the commercial bank with the largest number of RMB clearing banks in South America.

As the largest economy in Latin America, Brazil allows local currency settlement in bilateral trade with China, further confirming the global trend of "de dollarization".

Marcos Pires, director of the Institute of Economics and International Studies at the State University of S ? o Paulo in Brazil, pointed out that after using local currency settlement, export companies from both countries no longer need to exchange the real or renminbi for third-party currencies such as the US dollar, thereby eliminating additional transaction costs. "From a financial perspective, using local currency settlement can also create a large amount of real and renminbi capital, promoting direct investment

The Chinese yuan has surpassed the euro to become Brazil's second largest international reserve currency

It is worth mentioning that the Brazilian Central Bank announced on March 31st that the Chinese yuan has surpassed the euro as the country's second largest international reserve currency.

According to the International Reserve Management Report released by the Brazilian Central Bank on its official website on the same day, the Chinese yuan first appeared in Brazil's international reserve currency list in 2019. As of the end of 2022, the proportion of the Chinese yuan in Brazil's international reserves reached 5.37%, surpassing the proportion of 4.74% in the euro.

The report shows that currently, the US dollar still dominates Brazil's international reserves, accounting for 80.42%. Affected by factors such as the Federal Reserve's interest rate hike and the appreciation of the US dollar, Brazil's total international reserves in 2022 have decreased compared to the previous year. At the same time, the composition of the Brazilian central bank's international reserve investment portfolio has not changed significantly and remains committed to seeking diversified strategic allocation.

Multiple countries' distancing themselves from the US dollar

India and Malaysia have agreed to use Indian rupee for trade settlement, the Indian Foreign Ministry said in a statement recently, according to the website of the Hindu Daily. United Bank of India and others will provide support for this new mechanism. The report states that this move indicates India's willingness to take concrete measures to achieve "de dollarization" of its international trade.

According to the ASEAN Briefing website, a meeting of ASEAN finance ministers and central bank governors was recently held in Indonesia. The top agenda of the meeting is to discuss how to reduce the dependence of financial transactions on the US dollar, euro, Japanese yen, and pound sterling, and shift towards settlement in local currencies.

At the meeting, Indonesian President Joko Widodo also urged other ASEAN countries to use credit cards issued by local banks and gradually stop using foreign payment systems, including Visa and Mastercard of the United States.

Malaysian Prime Minister Anwar, who has just concluded his visit to China, stated in the country's parliament on April 4th that Malaysia has no reason to continue relying on the US dollar. Malaysia has proposed to China the idea of establishing an "Asian Monetary Fund", proposing that trade between the two countries can be settled in Ringgit and Chinese yuan, and China is also open to this proposal.

Prior to this, Iraq, the second largest oil producer of OPEC, also announced new international trade settlement measures. According to Reuters, the Central Bank of Iraq stated on February 22nd that the country plans to allow the settlement of import trade from China in Chinese yuan for the first time. Previously, the country's trade with China had been settled in US dollars. The Iraqi Central Bank says the new regulations will improve Iraq's access to foreign exchange.

The Latin American region is also taking action. According to the Financial Times, in January this year, Brazilian President Lula and Argentine President Fernandez announced that the two countries would prepare for the creation of a common currency belonging to the Latin American region and invite other countries from the region to join in order to promote regional trade and reduce dependence on the US dollar.

In January 2022, Türkiye and the Central Bank of the United Arab Emirates signed a currency swap agreement worth 64 billion lira and 18 billion dirhams to promote bilateral trade in local currency.

Last April, the Bank of Israel included the Canadian dollar, Australian dollar, Japanese yen, and Chinese yuan in its foreign exchange reserves for the first time. Previously, the country only held three currencies: the US dollar, pound sterling, and euro.

Last July, the Iranian foreign exchange market launched the Iranian Riyal/Russian Ruble currency transaction. Subsequently, Russia also stated that it will gradually abandon the use of the US dollar in its trade with Iran.

In January of this year, Saudi Arabia also stated at the Davos Economic Forum that it is open to settling trade in non US dollars.

On March 29th, China settled cross-border purchases of imported liquefied natural gas (LNG) in RMB for the first time. The transaction was reached by CNOOC and Total Group of France at the center of the Shanghai Oil and Gas Exchange

As of now, the People's Bank of China has authorized 31 RMB clearing banks in 29 countries and regions. Bilateral currency swap agreements have been signed with central banks or monetary authorities in 40 countries and regions, with a total amount of over 4 trillion yuan.

When foreign traders receive orders, they may ask the buyer if it is possible to pay in cross-border RMB?