(Yicai Global) June 19 -- China’s central bank has signed currency swap agreements totaling CNY3.47 trillion (USD490.4 billion) with 39 countries in recent few years, meaning the Chinese yuan now has the world’s largest currency swap coverage, according to a top Chinese academic.

The yuan has made great strides in terms of its internationalization in the past few years, Zhu Min, dean of the National Institute of Financial Research at Tsinghua University, told the Lujiazui Forum in Shanghai today.

The International Monetary Fund included the redback in its Special Drawing Rights in 2016, and the yuan has since become a worldwide reserve currency. Global central banks hold a total of CNY217.6 billion (USD30.8 billion) as foreign exchange reserves.

The yuan will continue to achieve major breakthroughs in investment, the Belt and Road Initiative and virtual currencies, Zhu said.

He also noted that China’s capital market has remained relatively stable since the coronavirus pandemic started, and the benchmark bond rate is attractive, holding about 200 basis points above the average for developed countries. Against this backdrop, foreign investors will continue to favor the Chinese market and increasingly need yuan-denominated and targeted financial products.

Most of the BRI’s investment and loans are still based in US dollars. Promoting the yuan’s use in BRI projects is an important future direction, according to Zhu.

Zhu said that digital money is the commanding point of future currency market competition. As the world’s second-largest economy and second-biggest financial market, China has a huge market for e-commerce and electronic deals. The development and application of digital currency is very important, so that will be one of the key areas of future yuan internationalization.

Editor: Peter Thomas