Why the Chinese yuan could soon be Africa’s most important currency
Africa is emerging as fertile ground for Beijing’s drive to make the yuan a major international currency and reduce reliance on the US dollar, as an increasing number of financial institutions deepen their integration with China’s payment network. Following talks in Beijing between Central Bank of Libya Governor Naji Issa and People’s Bank of China Governor Pan Gongsheng last month, the country’s…
China is positioning the yuan as Africa's most important currency, as several African countries deepen their integration with China's payment network, the Cross-Border Interbank Payment System (CIPS). The move is aimed at reducing reliance on the US dollar and facilitating direct yuan interbank payments for trade, accelerating cross-border transfers, and boosting trade flows.
Countries such as Libya, South Africa, Zambia, Angola, and Kenya have already joined CIPS, while others like Angola are preparing to do so. China is Africa's largest trading partner and the primary financier of the continent's megaprojects, with bilateral trade reaching a record US$203.5 billion in the first half of the year. As a result, the use of the yuan instead of third currencies like the US dollar or euro may facilitate even more trade at the margins.
Brief written by urgent.news from Reuters Business via SCMP's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
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