The multi-currency imperative: RMB strategy for financial institutions

A guide to RMB’s increasing internationalisation and the significant opportunities it presents for banks, central banks and investors.

9 March 2026

12 mins

Corporate & investment bankingFinancial institutions and investor groups

This guide highlights the substantial opportunities the renminbi’s internationalisation presents for the financial sector, looking at market expansion, the trends and challenges affecting different institutions and how they can take advantage in an increasingly diversified currency landscape.

The rise of the renminbi (RMB) as a key international currency represents a significant untapped opportunity for global finance. Far from being solely a Chinese domestic currency, the RMB currently ranks as the sixth most-used currency for international payments, the second in trade financing, the sixth in foreign exchange trading, and the seventh as a reserve currency globally. This prominence continues to grow as the currency landscape becomes increasingly diversified.

For financial institutions (FIs) seeking to diversify their portfolios and strengthen competitive positioning, RMB is becoming an increasingly strategic component. Institutions that gain early advantage today are set to capitalise on the opportunities in this rapidly evolving market. The question for many institutions is how and at what scale RMB can complement existing currency strategies.

The following guide breaks down the significant opportunities in RMB for banks, central banks and investors. We have also launched an annual report focused on the RMB opportunity for corporates – to read more, click here.

The RMB opportunity for financial institutions

The opportunity for FIs can be understood through three converging market trends collectively reshaping global finance:

A strategic imperative across segments

The overall opportunity for FIs in leveraging RMB is substantial. By tapping into China’s vast and growing financial markets, expanding the offshore CNH market and meeting the increasing corporate demand for RMB services, institutions that move today can position themselves advantageously in the fast-evolving global financial landscape.

Yet the RMB opportunity plays out differently across different financial services segments, and understanding these dynamics is essential for building an effective RMB strategy. Here, we will look at the distinct implications and opportunities for investors, banks and central banks.

Investors: opportunities abound in equities, bonds and public funds

For asset managers, hedge funds and institutional investors, as China’s currency internationalisation and market reforms accelerate, now is the time to incorporate RMB into portfolios.

Significant investment opportunities are present. The sheer scale of China’s combined equity and bond markets provides significant liquidity, creating advantages for institutional portfolios through the volume of investment opportunities. Investors can diversify across a spectrum of asset classes – with equities spanning various sectors and market capitalisations and bonds ranging from government to corporate credit. The substantial liquidity also allows for efficient entry and exit strategies by reducing transaction costs and risks.

Foreign participation in China’s bond market has also deepened meaningfully in recent years. More than 1,000 global institutional investors (including central banks, sovereign supranationals and agencies (SSAs), and real money asset managers) have collectively allocated approximately CNY 4 trillion to China’s bond market. In parallel, Panda bond issuance onshore and CNH bond issuance in Hong Kong have expanded steadily, reinforcing the role of RMB fixed income as a structural component within global asset allocation frameworks.

China’s financial markets also exhibit low correlation with developed markets – for example, its stocks have historically shown correlation with US markets of 0.49 and 0.76 with Europe. By incorporating Chinese assets, investors can reduce overall portfolio volatility and enhance potential returns. This is especially relevant for hedge funds and global asset managers constructing multi-strategy portfolios – exposure to Chinese markets has often provided diversification benefits during periods of turbulence, such as the COVID-19 pandemic, in developed markets and other emerging regions.

Recent policy shifts have created a strategic entry point for investors to access China’s markets today. The list of commodities futures and exchange-traded fund (ETF) options for qualified foreign investors is expanding. New enhancements to Swap Connect, which allows international investors to trade and clear onshore RMB interest rate swaps, have improved hedging, market depth and the potential for product innovation. In addition, allowing foreign investors to use onshore China bonds as collateral for repo transactions has opened the door for hedge funds to trade in this market in a capital-efficient manner.

The People’s Bank of China (PBoC) has further strengthened market infrastructure by formally recognising the Global Master Repurchase Agreement (GMRA) for bond repo transactions and opening the onshore repo market more broadly to global investors. These steps align documentation standards, product structures and trading formats more closely with international market conventions. Thereby, enhancing operational familiarity, capital efficiency and risk management for foreign participants.

The opening up of the public fund market also presents further opportunities. Facilitating the entry of wholly foreign-owned fund management companies has attracted major global asset managers, including Allianz, BlackRock, Fidelity and Neuberger Berman. These firms are leveraging their scale and expertise to develop innovative investment products tailored to Chinese investors, helping capture a share of the growing market but also enhancing the overall quality and diversity of investment options available to local investors.

As a result of this opening up, China’s private pension segment represents another significant opportunity. This market is expected to experience substantial growth as China’s changing demographics and policy reforms have driven domestic pensions into the evolving financial market. Foreign asset managers are leveraging their extensive offshore experience to attract retail investors and systematically build brand presence within this expanding segment.

Banks: capturing demand as corporates increasingly embrace RMB

For commercial and investment banks, RMB integration is becoming an increasing priority as global corporates continue to adopt the currency across trade settlement, cross-border investment and international financing.

This burgeoning use of the currency in international commerce requires robust, real-time clearing and settlement infrastructure. Banks that develop best-in-class capabilities in this area can attract and retain corporate clients actively expanding their China exposure – translating into growth in transaction volumes and fee income. Current statistics underscore the opportunity: despite being the sixth most-used payment currency globally (as per the January 2026 Swift RMB tracker), RMB accounts for just under 3 per cent of total international transactions. This modest percentage indicates substantial expansion potential for institutions that establish clearing leadership positions.

As RMB-denominated transactions rise, corporate clients also increasingly require competitive foreign exchange (FX) services and sophisticated cash management solutions. By developing these services, banks can meet evolving client needs while opening revenue streams from FX trading and cash management fees.

And as banks accumulate RMB deposits from clients, optimal liquidity management will become a priority. This requires systematic investment of excess liquidity in money market instruments and bonds. Effective liquidity management enhances profitability through improved asset-liability management and better investment returns.

Central banks: diversifying reserves and strengthening regional integration

The growing opportunity for central banks to incorporate RMB into their foreign exchange reserves and operations falls into even sharper focus today. Geopolitical shifts are increasing the need for diversification, while China’s forthcoming 15^th Five-Year Plan renews its push for RMB internationalisation.

The inclusion of RMB in the International Monetary Fund’s Special Drawing Rights (SDR) basket highlights the currency’s growing importance as a central bank reserve asset. Seeking both diversification benefits and potentially enhanced returns compared to traditional reserve currencies, central banks have been slowly but steadily allocating reserves to RMB assets. Over the past decade, RMB’s share in allocated reserves has grown from about 1.1 per cent to around 2.12 per cent today.This momentum is set to continue with the majority of central banks believing the renminbi’s role will expand over the next decade.RMB asset allocation can contribute to greater reserve diversification and potentially enhance portfolio resilience across economic cycles. This reserve diversification contributes to overall monetary policy flexibility and resilience against global financial shocks.

Central banks must also ensure that local banks maintain adequate RMB liquidity to facilitate trade and payment flows with China. This involves establishing bilateral currency swap lines with PBOC – optimising arrangements for Bond Connect and Swap Connect was highlighted by the PBOC at its 2026 Working Conference as a key measure as it continues to open up the financial system – and participating in infrastructure initiatives, including the Cross-Border Interbank Payment System (CIPS). These measures enhance RMB transaction efficiency and reliability, promoting expanded RMB usage across international trade. Enhanced trade settlement in RMB strengthens economic integration with China, generating tangible benefits for local economies through reduced transaction costs and improved payment reliability.

Mastering RMB: a competitive necessity

While opportunities abound in RMB engagement, there are challenges FIs must navigate to realise them. Coordinating transactions across onshore and offshore markets demands sophisticated operational strategies amid differing regulatory frameworks, which create complexity and barriers to seamless transactions. Liquidity management adds further pressure, as ensuring sufficient RMB accessibility across geographies proves demanding – especially during market volatility. And institutions with simultaneous onshore-offshore positions must also grapple with currency risk and intricate hedging needs. Accessing key venues such as the China Interbank Bond Market or offshore hubs involves varying infrastructures and entry requirements, and cutting across it all is the operational strain of maintaining compliance across multiple jurisdictions.

Yet despite these hurdles, the strategic imperative for FIs to integrate RMB into their core operations is clear. As China’s economic influence and financial markets advance, the currency’s role in the global landscape grows ever more pivotal, making RMB capabilities a competitive necessity. Institutions that embrace this provide direct access to one of the world’s largest and fastest-growing economies, enabling portfolio diversification, enhanced risk management and comprehensive client solutions. This integrated approach strengthens competitive positioning in a multipolar currency era, and those that move decisively today can secure operational and relationship advantages that will define market leadership over the coming decade.