Many of us in international trade, finance, or just following the news, have wondered: what changes if the Chinese renminbi (RMB) really becomes a global currency? Does it mean the US dollar (USD) loses its throne? This article dives into the practical, sometimes messy reality behind RMB internationalization and what it means for the USD’s central role. I draw on hands-on experiences, industry anecdotes, and authoritative sources to show both the hype and the hard facts. And yes, I’ll share a few mistakes and surprises I've run into myself.
My first real taste of RMB in global finance was in 2016, helping a client in Singapore import electronics from Shenzhen. The supplier insisted on RMB settlement, claiming it was “smoother” and “less risky.” But our bank was totally unprepared: they hadn’t updated their KYC for RMB, rates were opaque, and final settlement lagged days behind a typical USD SWIFT transfer. Later, I learned this wasn’t rare. But why was the supplier so insistent? And what does it say about the bigger picture for the USD?
Let’s break down the current state and a few wildcards lurking beneath the surface.
The Chinese government has pushed RMB internationalization for over a decade. In 2016, the IMF included RMB in its Special Drawing Rights (SDR) basket, a sign of global recognition (IMF official statement). According to the SWIFT RMB Tracker (Jan 2023), RMB is now the fifth most-used currency in global payments, with a 2.19% share—still far behind the USD’s >40%.
But here’s what’s changed, and where it matters:
Yet, in practical terms, the dollar is still the default for oil, major commodities, and international loans. A senior banker I interviewed in 2023 said, “Everyone is talking about RMB, but 90% of our cross-border deals are still in USD. The legal certainty just isn’t there yet for RMB.”
There are a few ways RMB’s rise could dent the USD’s dominance, at least around the edges:
In my own work, I’ve seen a few clients try to hedge their China exposure by holding RMB-denominated bonds. But here’s where the reality check hits: liquidity is thin, and capital controls mean you can’t always get your money out on your terms. That’s a big reason why the RMB’s share of global reserves is still modest.
Expert View: According to Brad Setser, a senior fellow at the Council on Foreign Relations, “The RMB will nibble at the dollar’s edges, but without full capital account liberalization and strong legal protections, it won’t seriously challenge the dollar’s core role.” (CFR source)
Here’s where it gets hands-on and, frankly, frustrating. If you’re handling “verified trade”—the kind that’s supposed to be clean, documented, and recognized by customs in multiple countries—the devil is in the details. RMB settlement sometimes triggers extra scrutiny from banks, customs, or even tax authorities, because documentation standards can differ.
Let me show you a comparison table I compiled after several hair-pulling client calls:
| Country | Verified Trade Standard Name | Legal Basis | Execution/Certification Agency | Key RMB Requirements |
|---|---|---|---|---|
| USA | Customs-Verified Invoice | 19 CFR § 141.86 | U.S. Customs & Border Protection (CBP) | USD preferred; RMB accepted but triggers extra AML checks |
| China | 出口货物报关单 (Export Declaration) | General Administration of Customs Law | China Customs (GACC) | RMB default; foreign currency settlement requires SAFE registration |
| EU | Single Administrative Document (SAD) | EU Customs Code (Reg. 952/2013) | National Customs Authorities | EUR default; RMB accepted with supporting docs |
What’s the upshot? Even if your supplier or buyer is happy to settle in RMB, you may face documentation or compliance headaches when moving goods or funds across borders. The US, in particular, scrutinizes RMB transactions for anti-money laundering (AML) reasons (FinCEN guidance).
In 2022, I worked with a Spanish textile importer and its Chinese supplier. The Spanish firm wanted to pay in RMB to get a better price. On paper, it looked easy: sign a contract, use the bank’s cross-border RMB service, and ship the goods. But the Spanish bank’s compliance team demanded dual documentation (both EUR and RMB invoices), and the Spanish customs office flagged the payment for extra review. It took two months (instead of the usual two weeks) to clear the funds and the goods. In the end, the importer saved a bit on price but lost more in time and compliance costs. Lesson learned: RMB settlement is possible, but not always smooth.
An industry contact at a major European bank told me, "We see increased interest in RMB trade, but our systems are still geared around EUR and USD. The learning curve is real, and we have to triple-check compliance on RMB settlements."
For those who want to dig deeper, here are some core legal and guidance documents:
If you’re hoping for a sudden “RMB replaces USD” moment, you’ll probably be disappointed. The real story is slower and messier. More trade and FX reserves will be in RMB, especially in Asia and among countries looking to hedge against US political risk. But practical barriers—capital controls, legal uncertainty, compliance friction—mean the dollar isn’t going anywhere fast.
If you’re a business or finance professional, my advice is: stay flexible, keep an eye on regulatory updates, and make sure your bank and customs broker really know how to handle RMB flows. The opportunities are real, but so are the headaches. And as always—don’t believe the hype until you’ve seen it work in your industry, with your own eyes (and bank statements).
Next steps: Monitor trade policy updates from the WTO, US Treasury, and PBOC. If you’re moving into RMB-denominated business, test small transactions first, document everything double, and ask your counterparties about their compliance experience. Sometimes, the smoothest path is still the old-fashioned USD route.