What renminbi is – and Why RMB internationalisation matters

Your guide to CNY and CNH markets, CIPS, key policies, and how corporates and FIs can cut FX risk and expand global market access.

15 August 2025

15 mins

Corporate & investment bankingCorporatesFinancial institutions and investor groups

The global financial landscape is experiencing a profound shift as the renminbi (RMB) solidifies its position as a key international currency. Far from being merely a Chinese currency, the RMB now represents the fourth most-used currency for payments, third in trade financing, fifth in FX trading and seventh as a reserve currency.

Over the past decade, the RMB has steadily evolved from a domestic financial tool into a globally recognised currency for trade, investment and financing. This growing international role, often referred to as renminbi internationalisation, reflects broader shifts in global economic activity, regulatory reform and China’s expanding footprint in international trade.

For any corporations or financial institutions, understanding this transformation isn’t just about staying informed – it’s about unlocking new opportunities, from cost-effective funding and efficient payments, to strategic currency diversification.

CNY vs. CNH explained: Onshore and Offshore RMB differences

To understand how the RMB functions globally, it’s important to recognise the distinction between CNY and CNH – two market environments for the same currency.

The Chinese currency is known as the renminbi (RMB) or yuan, and its official ISO currency code is CNY. This code is used universally in SWIFT payment messages, regardless of whether the transaction occurs onshore (RMB traded inside of China) or offshore (RMB traded outside of China). In short, for all RMB payments, CNY is the only recognised code – it’s the same currency, no matter where the cash settlement takes place.

However, in the foreign exchange (FX) market, a practical distinction arises between CNY and CNH. CNY refers to the Onshore renminbi, traded within Mainland China. The People’s Bank of China (PBOC) sets a daily central parity rate and allows the currency to trade within a controlled ±2 per cent band. This creates a managed floating exchange rate system that balances market dynamics with regulatory oversight.

CNH is a market term used only in the FX market to describe RMB traded offshore, in financial centres such as Hong Kong, London and Singapore. CNH is not an official ISO code, but it is widely used by market participants to distinguish offshore RMB from its onshore counterpart. Unlike CNY, CNH is freely traded, and its exchange rate is determined entirely by market forces, without daily intervention from the PBOC.

Think of it this way:

• CNY is the only ISO code for payments, whether onshore or offshore.
• CNH is a foreign exchange term, used solely to describe offshore trading of RMB in FX markets.

Understanding this distinction is essential for businesses managing RMB FX exposure, liquidity and risk across jurisdictions. With this foundation in place, infrastructure such as the Cross-Border Interbank Payment System (CIPS) plays a critical role in supporting both onshore and offshore RMB transactions globally.

How onshore and offshore RMB FX markets work

Businesses looking to manage their currency exposure to RMB have access to two distinct markets: the onshore and offshore RMB FX markets, each offering unique opportunities and instruments.

The onshore FX markets, denoted as CNY, are accessible to two distinct participant categories under specific eligibility criteria. Onshore corporations and financial institutions can access these markets for transactions with a genuine trade background, adhering to traditional FX management regulations. Offshore corporations and financial institutions gained expanded access through PBOC Circular 159 issued in 2018, which allows them to participate in eligible underlying transactions.

For offshore corporations, eligible transactions are limited to current account items such as goods and services trade and dividend payments, as well as Outbound Direct Investment (ODI) and Foreign Direct Investment (FDI) activities. For offshore financial institutions, access is specifically designed for Bond Connect, China Interbank Bond Market Direct (CIBM) Direct, and RQFII investors who need to hedge their China bond and equity exposures.

This regulatory framework enables offshore investors to access the deeper, more liquid onshore CNY FX market through their familiar offshore counterparties, rather than being limited to onshore banks for hedging needs.

The offshore market, commonly referred to as CNH (or through RMB Non-Deliverable Forwards, CNY NDFs), offers more flexibility. It is freely accessible to offshore entities and approved onshore participants, providing an open platform for currency trading and risk management outside Mainland China.

The basis between CNY and CNH exists, allowing corporations and financial institutions to select the most advantageous curve for their foreign exchange management, depending on prevailing market pricing.

Corporations transacting FX sales of RMB with a tenor beyond the standard two business days (T+2) incur a reserve charge. The PBOC has the discretion to adjust this reserve requirement based on market conditions. Foreign investors utilising onshore CNY FX for hedging investments through Bond Connect, CIBM Direct, or under the Qualified Foreign Investor (QFI) scheme are not subject to this reserve charge. By working closely with their local Standard Chartered Bank branch, corporations can identify the most suitable hedging opportunities – whether through the more flexible offshore CNH market or the increasingly accessible onshore CNY market – giving them greater control and confidence in managing currency risks linked to RMB.

What is CIPS? China’s cross-border RMB payment system and global connectivity

To cater for the growing volume of cross-border RMB payments, China has built its own CIPS. It was launched in 2015 to provide a more efficient payment route for RMB and as an alternative to traditional international currency payment rails.

As the core infrastructure for clearing and settling cross-border RMB payments outside China, and offshore-to-offshore RMB payments, CIPS enhances China’s connectivity with the global financial system. It also facilitates the accelerating use of the RMB as a currency for international trade and investment.

Despite being designed as an alternative to traditional payment systems, CIPS is compatible with SWIFT payment messages and uses the SWIFT industry standard for syntax in financial messages. For the international leg of payment instructions between Direct Participants (DP) and Indirect Participants (IP), SWIFT messages remain the primary communication channel.

The strategic collaboration between CIPS and SWIFT, formalised in 2016, allows CIPS to operate as both a payment system that directly clears and settles RMB transactions while utilizing SWIFT’s established messaging format for international connectivity.

In 2024, CIPS processed an impressive CNY175.49 trillion (USD24.45 trillion) in transactions – a 43 per cent increase from the previous year.

For businesses, CIPS offers real-time settlement capabilities 24 hours a day, five days a week, with an additional four hours of settlement availability outside that window. This enables it to connect over 1,683 financial institutions across 119 countries. The system has become particularly vital for companies operating along China’s Belt and Road Initiative corridors.

Standard Chartered China was among the first group of banks to become DPs in CIPS, and currently ranks first among foreign banks by the number of Indirect Participants connected through its network.

In 2023, Standard Chartered Hong Kong became the first foreign bank outside Mainland China to be approved as a DP in CIPS. Companies making payments through a DP, such as Standard Chartered, benefit from greater efficiency and lower costs.

Cross-border RMB payment regulations: current vs. capital account rules explained

The regulatory framework governing RMB cross-border payments varies significantly depending on the nature and location of transactions. For cross-border payments involving China, the key distinction lies between current account and capital account transactions. China has substantially liberalised current account payments, which include trade in goods and services.

As long as cross-border payments are supported by genuine commercial transactions with supporting documents, no prior approvals or restrictions apply. This liberalisation has been fundamental to RMB’s growing role in international trade settlement, with RMB settlement in China’s cross-border payments up 21 per cent year-on-year from January to August 2024.

Capital account transactions remain subject to China’s capital controls and regulatory oversight. Foreign investors seeking to invest in Chinese bond or equity markets must still apply for qualifications through programmes such as Qualified Foreign Investor (QFI), China Interbank Bond Market (CIBM) or Bond Connect. Similarly, Chinese corporations wishing to borrow from overseas markets are subject to foreign debt quotas and approval processes.

The most significant distinction lies in payments made entirely outside of China, where no such restrictions apply. For example, RMB payments from Hong Kong to Singapore, or between any offshore locations, face no regulatory constraints. Hong Kong, as the leading offshore RMB hub, operates with complete freedom for RMB fund transfers, with no restrictions on cross-border RMB transactions.

This regulatory structure creates distinct environments: trade businesses benefit from streamlined current account liberalisation, while investors must navigate capital account controls. However, companies operating entirely in offshore RMB markets enjoy complete transactional freedom, making offshore financial centres like Hong Kong, Singapore and London attractive hubs for RMB business activities.

RMB financing: from cross-border payments to strategic funding

The true evolution of RMB internationalisation extends far beyond simple payment settlement. Sophisticated financing options now make RMB a compelling funding currency for international operations.

RMB financing offers a range of options – including trade finance, as well as short- and long-term loans in renminbi – to support working capital needs for businesses sourcing from Chinese suppliers or selling to Chinese buyers. Growing interest in RMB financing is driven by low financing costs in RMB, shifting geopolitical landscapes, and the desire for greater currency diversification.

The RMB bond market offers two distinct pathways, each serving different strategic needs, as the table below shows.

The choice between these instruments often comes down to regulatory complexity versus the cost of funding. Dim sum bonds offer greater flexibility and streamlined processes aligned with international standards, while panda bonds provide access to China’s deep domestic liquidity pools at potentially lower rates.

Clients benefit from diversified currency exposure and the potential for a lower cost of funding compared to borrowing in US dollars.

With Standard Chartered’s global network, clients can access direct RMB loans through offshore local entities, enabling efficient funding solutions.

The offshore RMB liquidity pool remains relatively limited, with Hong Kong accounting for over 50 per cent of the global CNH pool. In many markets, local banks primarily rely on the FX swap market to access RMB funding to support their clients’ financing needs.

To meet the growing demand from our corporate clients across these markets, we leverage Standard Chartered Hong Kong’s RMB balance sheet as a key resource. By facilitating intra-group RMB funding, local Standard Chartered entities gain an additional RMB funding source, enabling them to more effectively meet the RMB financing requirements of their local clients.

How to seize the RMB internationalisation opportunity

The trajectory is clear: RMB internationalisation represents not just a policy initiative, but a structural shift in global finance. By the end of 2024, the RMB’s share in global payments ranked fourth, while its share in global trade financing stood at third, indicating momentum that extends across multiple dimensions of international finance.

With clearer knowledge of RMB markets and mechanisms, businesses can now participate in this internationalisation with confidence. The question is no longer whether RMB will play a larger role in global commerce, but how quickly companies can position themselves to benefit from this transition.

Working with experienced partners who understand both the opportunities and complexities of RMB internationalisation – partners like Standard Chartered, with our proven track record and comprehensive global capabilities – enables businesses to navigate this evolution strategically and profitably.

The RMB revolution is underway. The question for business leaders is: Are you ready to participate?

For more insights on how RMB internationalisation can benefit your specific business needs, explore Standard Chartered’s comprehensive analysis, What renminbi internationalisation means for you.