We dont hear words like potential any more. It is happening now, says Beth Smits, head of channels in the Asia Pacific region for SWIFT. Our customers are asking all the time to write letters of credit in RMB.
Like many financial services business, SWIFT is seeing greater growth in Asia, compared to the more traditional markets of Europe and the U.S. Intra-regional growth within Asia has also been an area of growth for SWIFT. Year on year, growth rates in Asia for SWIFT have hit 18%, compared to 4% for its global growth rate.
We have seen growth across inflows, trade finance flows, and securities flows, says Patrick de Courcy, head of markets in Asia Pacific for SWIFT.
You will see investment in Indonesian bonds, in local debt instruments, much more than you would have a couple of years ago. In Indonesia we have had a 50% increase in securities messaging, year-on-year, says de Courcy.
What you have is an ability to build it now, and build it quickly. In China for cross-border trading, they went immediately to ISO 20022. They get it. The Hong Kong Monetary Authority also realized that using SWIFT made sense, says Smits.
India is also another success story, despite the often-documented difficulties the country has had with painful regulators and bureaucracy. Smits points toward the recent launch of Indias drive to increase growth with the introduction of a unique 12-digit number (Social Security-style) to all of its 1.2 billion population, in order to allow the poor better access to government services. It is both an opportunity to the [financial services] industry, but also an opportunity for macroeconomic growth, says Smits.
In India, they dont try and improve the efficiency of the legacy, they just build a new system, says de Courcy. You have no choice when you have over a billion people with six-hundred million mobile phones, and only 20% to 30% of the population that has a bank account.
SWIFT also sees huge opportunities in the RMB, not only for settling trades but also the potential for the RMB to become a reserve currency. Malaysia has started to use RMB as a reserve currency. McDonalds, the fast-food giant, recently become the first corporate to issue a RMB-denominated bond. The bond issuance, managed by Standard Chartered, sold in less than two hours.
J.P. Morgan has today announced an expansion to its RMB international trade settlement services with Shinhan Bank implementing RMB clearing and trade solutions.