The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Singapore beats London as offshore yuan hubs jostle for new positions
Singapore, the US, Australia and South Korea emerged as the offshore hubs that saw their shares of the renminbi payments market grow the most in the past year.
Singapore overtook London to become the biggest offshore renminbi centre outside Hong Kong. Its payments value accounted for 28.4 per cent of the business not conducted in Hong Kong or on the mainland last month, up from 16.5 per cent in June last year, according to global transaction services organisation SWIFT.
The US replaced Taiwan to become the third-biggest player outside Hong Kong or the mainland, with a market share of 10.8 per cent, while Australia replaced Luxembourg as sixth-biggest.
South Korea was the biggest mover, climbing from 15th last year to eighth spot, on the back of a strong policy push by regulators in Seoul.
New SWIFT data showed renminbi settlements rose 563 per cent in South Korea between June last year and last month. In an earlier announcement, SWIFT said the value of renminbi payments in the US rose 327 per cent between April last year and April this year.
Competition for offshore renminbi business, including trade settlement and capital investment, is getting fiercer as more centres seek to grab a share of the pie and capitalise on Beijing's ambition to make the renminbi a global currency.
Hong Kong is still the undisputed No1 renminbi payments centre, but its global market share fell from 78 per cent in January 2012 to 71 per cent last month.
Meanwhile, some European countries that have traditionally had strong trade or investment ties with the mainland, such as Britain, Germany and France, have seen their market share shrink as others catch up from bases of close to zero.
"While China is Korea's most important trade partner, receiving nearly a third of our goods exports, Korea has historically been underweight in the use of RMB," said Martin Tricaud, chief executive for HSBC Korea, using the abbreviation for renminbi.
"Korea has taken a number of steps to support internationalisation of the RMB," he said.
"As a result, Korean companies are increasingly attuned to RMB developments as part of their global trade and liquidity strategies and they're capitalising on the opportunities the currency provides.
"We expect the RMB to be one of the top three global trade currencies by 2015 and we forecast that the RMB will be fully convertible within five years."
Overall, the renminbi reinforced its position as the seventh-most-active currency for global payments, accounting for 1.55 per cent of payments worldwide last month.