On Wednesday 13 September, the National Institution for Finance & Development (NIFD), authorized by China’s central government as one of 25 national-level think tanks, and CLS held a joint forum at the Academic Lecture Hall of the Chinese Academy of Social Sciences (CASS) on RMB internationalization and the foreign exchange market.

Financial market infrastructures, including payment and settlement systems, play a vital role in the internationalization of the renminbi. As China’s economy and financial strength grows so will the expected global use of RMB (and therefore FX) for trade settlement and investment. However this must be supported by, among other things, an efficient, robust and reliable cross-border payment and settlement system that allows FX market participants to safely manage their counterparty exposures and settlement risk. These important topics underpinned the agenda and discussions themes at the joint forum.

The agenda included presentations from the Chairman of the NIFD, Li Yang, and the Deputy Administrator of the State Administration for Foreign Exchange (SAFE), Lu Lei, the Chairman of BNY Mellon APAC, the Head of Public Policy APAC for BlackRock, the Head of Global Markets for HSBC, the CEO of ASIFMA (Asia Securities Industry & Financial Markets Association), senior managers from Chinese payment systems and leading Chinese economists as well as senior executives from CLS to name a few.

Two research papers were presented at the forum. The first paper, a study led by the NIFD in collaboration with CLS, provided an analysis of FX trading patterns to ascertain behaviors of internationalized currencies. The second paper, by CLS, provided analysis and observations of the FX market highlighting the inherent risks in FX, the impact of peak trading events on counterparty risk and the risk mitigation benefits of payment-versus-payment (PvP) settlement. Both reports were predominantly based on CLS’s aggregated, executed FX trade data.

Almost 200 people attended the forum with a diverse range of delegates including representatives from public bodies, academic and policy advisors, market participants and industry bodies.

"China is exploring her path for financial opening-up and RMB internationalization in the new economic environment. As a result of the cooperation between NIFD and CLS, the RMB and FX Forum will help our government, financial institutions, and researchers to learn the latest development of global FX market and international financial infrastructure. This is critical for a clearer understanding of our position and available tools. We hope the outcome of the forum to be soon reflected in our policy and financial practices."

Professor Li Yang, Chairman for NIFD

“China’s continued internationalization and significance to the global economy has and will continue to generate significant demands in foreign exchange for domestic and international entities involved in cross-border trade and investment with China. CLS is very pleased to collaborate with our esteemed colleagues at NIFD in developing this forum, enabling almost 200 delegates to hear unique insights presented by the diverse and well-respected Chinese and international speakers. With mitigation of FX settlement risk at the core of our mission, we look forward to continued engagement on these important matters and supporting RMB internationalization.”

Rachael Hoey, Head of Asia for CLS Group