While the renminbi's internationalization has been advancing steadily amid the completion of related institutional arrangements and rising international investor interest in yuan-based assets, continued efforts can be made to facilitate the development of the offshore RMB market so that the currency can play an even bigger role globally, said experts.

Their comments come as the Chinese currency's share in global payments, measured by value, hit an all-time high of 4.74 percent in July, as calculated by global financial messaging services provider the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.

The RMB remained the fourth most active currency for global payments by value for the ninth consecutive month in July. Overall, RMB payment value increased by 13.37 percent from that in June, SWIFT said.

While the RMB overtook the euro to become the second-largest global currency in the trade finance market in June, with a market share of 5.99 percent, its share further grew to 6 percent in July, helping the Chinese currency retain second place, behind only the US dollar, said SWIFT.

According to the resolution of the Central Committee of the Communist Party of China on further deepening reform in a comprehensive manner to advance Chinese modernization — which was adopted during the third plenary session of the 20th CPC Central Committee in July — efforts should be made to steadily and prudently advance the internationalization of the RMB and develop offshore RMB markets.

Chen Yulu, president of Nankai University, said that the advancement of the RMB's internationalization can help safeguard the stability of a diversified reserve currency system.

The People's Bank of China, the country's central bank, on Monday inked a memorandum of understanding with Vietnam's central bank for bilateral local currency swaps. According to the PBOC, it had entered into agreements with over 40 central banks for bilateral local currency swaps by the end of 2023, with the total value reaching 4.16 trillion yuan ($580 billion).

While global geopolitical relations are undergoing profound changes and the negative impact of the strong US dollar policy is affecting a wider part of the world, the bilateral local currency swap agreements have helped to address the world's rising demand for financial security, experts from International Monetary Institute at Renmin University of China wrote in a report released in late July.

In July, two new institutions were directly connected to the Cross-border Interbank Payment System, or CIPS — the system launched in 2015 to integrate channels for RMB cross-border payments and settlements. Thus, the total number of direct participants reached 150. Another six new institutions were indirectly involved in the system last month, boosting the total number of such participants to 1,401.

Lu Qianjin, a professor of international finance at Fudan University, said CIPS has strengthened ties with payment systems in economies involved in the Belt and Road Initiative. It has also facilitated RMB-denominated borrowing in offshore markets, RMB settlements for cross-border trade, and overseas investor access to China's onshore bond and stock markets, he said.

According to the State Administration of Foreign Exchange, foreign investors' net holdings of Chinese onshore bonds amounted to $20 billion in July, up 1.4-fold from a month earlier.

RMB asset stability and value over the long term have been widely recognized in global financial markets. The RMB's role in international payments, pricing and reserves has been strengthened, driving central banks to increase their exposure to the currency, said Wang Youxin, a senior researcher at Bank of China.

The Bond Connect program, launched in 2017, which improved qualified foreign institutional investor mechanisms and the Swap Connect launched last year have added to the RMB's appeal among international investors, said Xiong Aizong, a senior research fellow at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

There is room for development concerning offshore RMB clearing, which can increase the cross-border trade and use of the yuan, Xiong said.

Huang Yiping, dean of Peking University's National School of Development, said that Hong Kong can be supported to grow into the largest offshore RMB market as full capital account liberalization is unlikely in the short term.

"In this way, although 'nonresidents', or international investors, cannot completely freely enter and exit the capital market of the Chinese mainland, they can freely trade and hold yuan-denominated assets in the Hong Kong market. This can provide crucial support for internationalizing the RMB," Huang said.