Other global centers fast catching up with the city in payments, report by SWIFT says

Stiff competition from emerging offshore yuan centers around the world eroded Hong Kong's share of global payments in the Chinese currency during February, the Society for Worldwide Interbank Financial Telecommunication said in a report on Monday.

The La Hulpe, Belgium-based SWIFT provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.

SWIFT said that although Hong Kong still has a 70 percent share of global renminbi payments, its dominance is facing stronger challenges from the other markets whose combined share of the market increased to 25 percent in February, from 17 percent a year earlier.

Money market analysts said that both Singapore and London, which are established financial centers, are stepping up efforts to expand their offshore yuan markets.

Several new players, including Bangkok, Doha, Frankfurt, Kuala Lumpur, Luxembourg, Paris, Seoul and Toronto and, more recently, Sydney have joined the race.

Together, they represent the largest market, excluding Hong Kong, using renminbi for payments, the SWIFT report said.

"The use of renminbi by more countries or regions beyond Hong Kong is a good testimony of the internationalization of the Chinese currency", said Michael Moon, head of payments for Asia-Pacific region at SWIFT.

Such a development is natural and reasonable, said Nathan Chow, an economist with DBS Bank (Hong Kong) Ltd. "Hong Kong's share will decline with other offshore centers emerging, showing that there is actual business demand in many different regions," he said.

But bankers and analysts tried to play down the threat to Hong Kong's dominant position as an offshore yuan center, citing large potential for growth.