The U.S. dollar is still the most traded currency in China’s foreign exchange market, followed by euro and yen. In terms of transactions, foreign exchange market has already become the second largest investment market in China after the stock market. The common trading way of foreign exchanges in China is firm offers through commercial banks, while margin trading is still not allowed in China.
Due to China’s large volume of foreign exchange reserves and fast-growing share in international trade, RMB’s credibility is also increasing and becomes one of the most commonly used payment currencies. A growing number of currencies can be now directly exchanged with RMB without the change to U.S. dollars first. And some of the world’s major oil exporters are also accepting RMB as oil settlement.
In October 2019, China announced that its central bank People’s Bank of China could be the first central bank to issue own digital currency in the world. Although there is still no evidence showing if the mentioned digital currency is based on blockchain technology, Chinese government has decided to promote blockchain technology as one of China’s technology innovation aspects in the next years. China once owned the largest bitcoin industry in the world. However, the industry shrank rapidly since the government’s ban and many Chinese investors turned to trade on overseas platforms.