Hong Kong SAR can power the next stage of RMB internationalization

Editor's note: Bruce Pang is an AsiaGlobal fellow at the Asia Global Institute, University of Hong Kong. The article reflects the author's opinions and not necessarily the views of CGTN.

China's ambition to push the renminbi (RMB) further onto the global stage, open the capital account wider, and build a cross-border payment system that is both independent and secure, is made clear in its 15th Five-Year Plan recommendations. At the center of this effort sits the Cross-Border Interbank Payment System (CIPS) - the infrastructure through which RMB flows across borders, underpinning trade, investment, and financial stability.

CIPS has grown rapidly since its launch. Built by the People's Bank of China, it now connects more than 1,700 participants worldwide, reaching over 5,000 banks in 190 countries and regions. In effect, wherever RMB is used, CIPS is there. 

While it does not yet match SWIFT's global reach, CIPS has already become a pillar of RMB internationalization, reinforcing the currency’s position as the world's third most-used payment currency and a top-three trade finance currency. RMB settlement in goods trade climbed to 27.2 percent in 2024 and rose further to 28.1 percent in the first half of 2025.

The system's expansion has streamlined settlement, cut costs, and reduced reliance on intermediary banks. In 2024 alone, CIPS processed 175 trillion yuan ($24.7 trillion) in cross-border transactions - a 43 percent jump from the previous year, with average annual growth above 40 percent over the past five years. This surge reflects both stronger infrastructure and China's broader push to internationalize the RMB, from the launch of the International Digital RMB Operations Center to the multilateral central bank digital currency bridge.

Still, CIPS remains a challenger in a dollar-dominated world. Most overseas participants are indirect members, still dependent on SWIFT messaging. Offshore RMB liquidity pools are far smaller than dollar liquidity, limiting adoption by non-Chinese institutions. And while RMB settlement is rising, commodities remain overwhelmingly priced in dollars, leaving RMB without full pricing power. These gaps in reserves, liquidity, and pricing authority highlight the scale of the challenge.

Closing that gap requires four priorities:

Upgrade the technology: Expand capacity, boost transaction volumes, and deploy blockchain and AI to enhance transparency and efficiency.

Expand demand: Serve high-frequency e-commerce and emerging market needs, promote RMB pricing in commodity trade across the Global South, and deepen RMB settlement within RCEP.

Strengthen policy support: Integrate digital RMB with CIPS, lower entry barriers for overseas institutions, and shorten participation cycles.

Build the offshore ecosystem: Deepen ties with major financial centers, expand offshore RMB liquidity pools, and reinforce clearing networks.

This is where Hong Kong Special Administrative Region (SAR) comes in. As the world's largest offshore RMB hub, the city has the liquidity, institutional depth, and global connectivity to power the next stage of RMB internationalization. 

Since 2021, CIPS has expanded in Hong Kong SAR, supporting "Bond Connect" southbound settlement and integrating with the city's RTGS system. By the third quarter of 2025, 113 institutions in the SAR were participating in CIPS. Combined with initiatives such as the Mainland-Hong Kong Fast Payment Link, the digital RMB cross-border platform, and the Greater Bay Area QR code payment scheme, Hong Kong SAR has become a proving ground for efficient, secure, and innovative cross-border payment solutions.

The opportunity is clear. Hong Kong SAR's deep market foundation can provide the liquidity CIPS needs to operate at scale. Its internationally aligned financial rules and extensive institutional networks can broaden CIPS's global ecosystem. And its leadership in offshore RMB product innovation and digital currency infrastructure can accelerate RMB adoption in trade and investment.

CIPS has already established itself as a critical pillar of RMB internationalization. But its future depends on whether it can move from being a "catch-up player" to a genuine alternative in the global payments landscape. Hong Kong SAR, with its unique position and capabilities, is not just a participant in this journey - it is a driver. By leveraging its strengths, the city can help transform CIPS from promising infrastructure into a truly global platform, accelerating the RMB's rise as an international currency.