After considering the increasing international role of the Chinese renminbi, the Magyar Nemzeti Bank, in line with other central banks, has examined the opportunity of developing a renminbi reserve portfolio and decided to build a Chinese bond portfolio in several steps, for economic policy and foreign currency asset diversification purposes. Following the decision, a small RMB bond portfolio relative to the size of the Bank’s reserve assets may be built which would not materially influence foreign exchange reserve adequacy.
Reflecting the increasing global economic weight of the Chinese economy, the role of the renminbi has grown steadily in international settlements in recent years. Central banks, as well as market and government participants have urged the development of the infrastructure necessary to use the renminbi. Investments may be increasingly settled in the renminbi and its international role may increase further in parallel to the likely further liberalisation of Chinese capital transactions, the exchange rate regime and interest rates.
Due to the increasing international role of the renminbi and global efforts to promote its wider use, a number of central banks, including the MNB, have entered into bilateral swap agreements with the People’s Bank of China. In addition, several central banks (e.g. the Bank of England and the Reserve Bank of Australia) have started to purchase renminbi assets.
In view of the dynamic process of the renminbi becoming an international reserve currency, on 19 February the Magyar Nemzeti Bank launched its five-pillar Renminbi Programme, one pillar of which is to develop a foreign exchange reserve portfolio.
The MNB will inform the general public about the realisation of renminbi investments.