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Standard Chartered has launched an index that tracks renminbi (Rmb)-based business activity worldwide.

The monthly Rmb Globalisation Index (RGI) allows subscribers to view Rmb activity in Hong Kong, London and Shanghai and measures business growth across four areas of usage: deposits, dim sum bonds and certificate of deposits, trade settlement and international payments, and foreign exchange.

Kelvin Lau, senior economist at Standard Chartered, says the RGI provides the market with “a holistic and consolidated perspective” on Rmb activity that was previously lacking. He tells GTR that the bank has launched the RGI because “sufficient data points are now available to work on following the CNH market’s (Hong Kong’s Rmb trading market) exciting take-off in 2010”.

Alongside the launch of the RGI, Standard Chartered announced the results of its first quarterly Offshore Rmb Corporate Survey, in which Asian and European corporates expressed a strong appetite for using Rmb offshore over the next six months.

Lau says that this points to the continued “normalisation” of the Rmb within the global markets and that within that, Rmb trade settlement has and will continue to be a major driver.

He adds: “Trade settlement is set to remain the main driving force behind Rmb internationalisation, as under the current account it can already flow freely in and out of China if backed by genuine trade documents. The rise of new offshore Rmb financial centres in London, Singapore and Taipei will help make the market get bigger.

An increase in the size of the CNH market will act like gravity, pulling new and especially natural users in. Over time, we expect Rmb to provide an attractive alternative to the US dollar, and share the gains of becoming a reserve currency status itself.”

For the trade finance sector, the index is representative of the perceived shift in the balance of power, with banks and corporates turning their gaze increasingly towards Asia.

Lau tells GTR: “With the economic and financial power shifting further from the west to the east, the ability to use a currency that is most relevant and sensible to Chinese firms should open doors for foreign companies that want to sell into or source from China. The same could be said for financial institutions, where the demand for Rmb-denominated investible assets could only rise on the back of China’s growing economic power.”