China recently appointed its current head of foreign exchange agency as the head of a special monetary policy office to promote internationalization of China’s currency. Lately, China has been advocating the broader role of the RMB in global financial transactions. China has signed currency swap agreements with several key trading partners, including Brazil and Argentina. It has also indicated an interest to conduct business with Russia using the RMB.

On July 6, China’s central bank released a rule permitting companies in select cities to settle cross-border trades using the RMB. China’s central bank claimed that the move would likely reduce companies’ exposure to foreign exchange risks, increase liquidity in foreign trade and cut transaction costs.

These actions signifies an effort by China to reduce reliance on the USD for international trade. At the end of June, Chinese foreign exchange reserves topped $2.13 trillion, $801.5 billion of which are U.S. Treasury Bills. China is the United States' largest creditor. However, due to the economic downturn and the declining value of the USD, China is looking to diversify some of its holdings.