On December 23, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced the latest monthly report and statistics. In November 2022, the world's major payment currencies were ranked based on amount statistics. The U.S. dollar, euro, pound, and yen ranked among the top four. The overall situation showed that the U.S. dollar and the euro were competing with each other, and other currencies were hovering in single digits.
Looking at specific data, in November this year, the U.S. dollar’s international payment share was 41.38%. Although it maintained its status as the world’s largest payment currency, its share was 42.05% last month, a sharp drop of 0.67 percentage points. The euro, another mainstream currency that can compete with the U.S. dollar, reaped the benefits when the U.S. dollar's share declined. Its global payment share increased from 34.43% in October to 36.12%, a significant increase of 1.69 percentage points, ranking it the second largest payment currency in the world.
The United States is the most powerful country in the world today. In the 1970s, the Bretton Woods system collapsed, and the U.S. dollar was decoupled from gold. It was later bound to the Middle East oil trade, establishing the petrodollar system, establishing U.S. dollar credit, continuously expanding the scope of settlement in the global trade field, and possessing the attributes of a world currency.
In recent years, the United States has taken advantage of the hegemony of the US dollar to wield the big stick of sanctions, frequently initiating financial sanctions against other countries, and excluding individual countries from the international trade payment system. This has made foreign trade more difficult and economic development has been in trouble. It can be said that the world has been suffering from the US dollar for a long time.
It’s just that sanctions are a double-edged sword after all. The more severe the U.S. dollar hegemony sanctions other countries, the stronger the idea of "de-dollarization" in various countries around the world. The decline in the share of U.S. dollar payments also illustrates this point. Financial sanctions will add trouble to the foreign trade of the sanctioned country, but it does not mean complete isolation from the world. Especially countries rich in oil, gas and mineral resources can still take a certain initiative.
The euro has been carrying the hope of Eurozone countries to break the hegemony of the US dollar since the day it was born. The euro's higher price than the US dollar has always been accepted by the market. However, it has experienced the negative impact of two wars and the backbone of the euro has also been interrupted. This year's geopolitical conflicts in Europe have caused the exchange rate of the euro to the US dollar to fall below 1:1.
Part of the reason why the euro payment share increased in November is that Europe purchases high-priced natural gas globally, and it is reasonable to gain more market share in the payment share based on amount statistics.
Of course, the payment proportion of in the Eurozone and is still somewhat high, because the trade between the 19 member countries of the Eurozone is also included, which is equivalent to an internal brushing operation. If the proportion of Euro payments outside the Eurozone is simply calculated, it will drop by a few percentage points.
In November, the pound and the yen occupied the third and fourth places in the global payment market share, accounting for 7.09% and 2.54% respectively. The RMB ranked as the fifth most active currency in the world, and its payment share increased from 2.13% in October to 2.37%. increased by 0.24 percentage points compared with .
Overall, the share ranking of the international payment market shows a situation of "the strong will always be strong". The status of the US dollar and the euro cannot be shaken in a short period of time. Although the share of the pound is in single digits, it is more than twice as high as the share of the yen and the renminbi. Only the share of the yen and the renminbi are very close, with the fourth and fifth places often overtaking each other.
The Japanese yen's global payment share dropped to 2.54% in November from 2.95% in October, hitting the lowest point since August 2014. Compared with the high of nearly 4% in March 2020, it has decreased by nearly 1.5 percentage points. Although the Japanese yen maintains its status as the fourth largest payment currency in the world, its popularity in the market is not as popular as before. For more than a year, the Japanese yen exchange rate has been falling continuously, and the Japanese yen has depreciated by more than 20% against the US dollar. For more than a year, without doing anything, the purchasing power of the Japanese yen held in international trade has depreciated by 20%. It is normal for the Japanese yen's payment share to decline.
China is the world's largest trader of goods. According to SWIFT statistics, the RMB only ranks the fifth largest payment currency in the world. Its share in November was only 2.37%. Although the absolute value is small, the growth rate is gratifying. Compared with October 2022, the overall amount of RMB payment increased by 15.64%.
The above data are all based on SWIFT statistical data. At the same time, China also has an exclusive payment and settlement system independent of the SWIFT system – CIPS (RMB Cross-border Payment System). Some RMB cross-border settlement is completed through CIPS. According to statistics from The Economist magazine, the SWIFT system settled US$140 trillion in transfers and remittances in 2021, accounting for 90% of the total global remittances; according to data released by my country's central bank, the CIPS system processed a total of 3.342 million payment transactions in 2021, with an amount of 79.6 trillion yuan, approximately US$12 trillion, equivalent to 8.6% of the SWIFT system.
After all, our cross-border settlement system started late and has a shallow foundation. It cannot be compared with SWIFT in terms of software, hardware and user scale. The current results are already good enough. You can't reach a thousand miles without taking small steps. You have to eat one bite at a time. The road must be taken step by step. A small step forward every year will add up to a big step in the internationalization of the RMB.
We are now ranked fifth in the world's major payment currencies. The gap between the third-placed pound and the fourth-placed yen is not big. As China continues to open up at a high level, the opening up of the financial market is also gradual. In the future, the proportion of RMB payment in the global market will further increase.
