HSBC has implemented a renminbi (RMB) cross-border payments and collections solution for a Fortune 500 company in China. It provides a centralised approach to cash management by enabling Chinese subsidiaries of the major power and automation technologies group to use RMB to settle cross-border payments and collections with their parent company's overseas treasury centre.
According to HSBC, the tailor-made 'gross-in/gross-out' model not only eliminates foreign exchange (FX) exposure and optimises liquidity management for the company, but it sets a precedent for other multinational companies (MNCs) that will ultimately help boost circulation of the RMB outside mainland China.
Use of the RMB for global trade and payments has soared since Chinese authorities began to liberalise the rules governing the currency in 2009. Some 10.5% of China's total merchandise trade was settled in RMB last year, and HSBC forecasts that share will rise to 30% by 2015.
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