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The renminbi (Rmb) has become the second most widely-used currency globally for trade finance, according to Swift.

The e-invoicing company released data which shows that, this month, the Rmb overtook the euro, the market share of which dropped from 7.87% in January 2012 to 6.64% in October 2013. The Rmb now holds a market share of 8.66% compared with 81.08% for the US.

However, “[The figures] are not telling us anything about the use of the Rmb paying for exports and imports. The Rmb is second only in terms of trade finance which is a very specific subset of overall trade activities,” Mark Williams, chief Asia economist with Capital Economics explains to GTR.

Separate figures released by Swift show that the Rmb remained the 12th most frequently-used currency in the world for exports and imports payments.

Activity for export payments decreased slightly in October, with the share of total value dropping to 0.84% compared to 0.86% in September 2013, sitting behind the dollar, euro, pound, yen and the Hong Kong dollar.

“Trade financing is very popular in China because it is a means by which companies can access credit, which otherwise they would struggle to get,” adds Williams.

Overall, since the internationalisation process was started by the Beijing government in 2009, use of the Rmb has grown.

“The significance of the Rmb in trade is undoubtedly growing and is only going to increase in pace. In the next five years we expect it to be fully convertible and have forecast that over half of China’s trade with emerging markets will be settled in Rmb in that time,” says Noel Quinn, regional head of commercial banking for HSBC Asia Pacific.

Some of this growth has been through currency speculation rather than solely trade flows, but the use of the renminbi has grown, rising from 20th place to 12th place in Swift’s payments for exports and imports rankings in the last two years alone.

China and Hong Kong account for 80% of total Rmb sent and received, Singapore for 12%, Germany and Australia 2% each with the remaining 4% accounted for by other countries.

“The vast majority of businesses outside of Greater China still haven’t taken full advantage of the Rmb for cross-border transactions. As the internationalisation of the currency gathers pace, businesses must start preparing to unlock the potential of the Rmb in international trade,” adds Quinn.

Jay Bryson, global economist with Wells Fargo, agrees, telling GTR: “My sense would be that [the growth of the renminbi] is being driven more on the Chinese side … If you’re a Chinese company it’s nice to be able to settle trades in your own currency rather than having to be exposed to foreign exchange risk.”

Despite this, many market participants continue to be positive about the renminbi use for trade in the future. Arthur Zou, country executive for China at Abn Amro: “I strongly believe that the popularity will continue. However, it will take some time before such popularity can spread to non-LC or non-China related trade.”

Bryson agrees: “With everything we hear the government laying out we’ll definitely see more internationalisation as we go forward. I don’t expect it to change dramatically over night … Five years from now, I think it will be much more of an international currency then it is today.”