Direct RMB Payments Will Cut Costs, Boost Trade

COLOMBO (News 1st); Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, has emphasized the strategic importance of establishing a direct Renminbi (RMB) payment mechanism to streamline trade and financial transactions between Sri Lanka and China.

Currently, Sri Lankan importers must convert rupees into U.S. dollars and then into RMB, a process that increases transaction costs and exposes traders to multiple exchange rate risks. 

A direct RMB settlement system, Dr. Weerasinghe explained, would eliminate these intermediary steps, resulting in lower costs, greater efficiency, and enhanced pricing stability in trade contracts.

“This would provide same-day fund transfers, reduce processing time and fees, and offer a more convenient option for RMB payments,” he said.

The Central Bank is exploring the establishment of a RMB Clearing Bank in Sri Lanka — an offshore financial institution authorized by the People’s Bank of China (PBOC) to handle RMB transactions outside mainland China. Such a facility would allow local banks and enterprises to manage RMB accounts, settle cross-border payments, and conduct domestic RMB transactions without relying on foreign correspondent banks.

Dr. Weerasinghe noted that since 2022, the PBOC has expanded its global RMB clearing network to over 30 countries and regions, and Sri Lanka could benefit significantly by joining this framework.

“This would not only reduce reliance on the U.S. dollar but also improve access to Chinese financial infrastructure and RMB-based products,” he added.

The Governor noted that adopting the RMB for trade settlements would strengthen financial cooperation, boost investor confidence, and encourage greater Chinese participation in Sri Lanka’s trade and investment landscape.