Evolution and challenges of the yuan’s internationalisation

This paper examines recent developments in the internationalisation of the Chinese yuan, focusing on trade and portfolio flows, foreign exchange markets, cross‑border payments, and official reserve holdings. The promotion of the yuan’s global role has been a deliberate policy objective for Chinese authorities over the past two decades. The use of the yuan in China’s own cross‑border trade and portfolio flows has increased in recent years. Still, broader international adoption of the yuan remains very small compared to the US dollar and the euro and has not increased markedly in recent years. Under the current Chinese economic and financial framework—characterized by constrained capital account openness and an emphasis on market and exchange rate stability— the scope for a substantial increase in global yuan use remains limited.