The US dollar is by far the most important currency for handling international trade payments (Boz et al. 2020). Could the Chinese renminbi eventually become a global currency for international trade and challenge the US dollar’s dominant position? What are the avenues through which this could happen?
Eichengreen et al. (2022) argue that while the British pound and later the US dollar became global currencies after being traded in deep and liquid financial markets, the future expansion path for the renminbi might be different. The beachhead for the internationalisation of the renminbi, they suggest, might be its use as an invoicing currency for trade with China.
While this is an important and timely debate, there is a lack of empirical evidence to ground it, especially when it comes to the mechanisms through which global currencies might emerge.
A unique policy experiment in Argentina
In new research (Benguria and Novy 2025), we explore a unique policy experiment in Argentina that sheds light on this debate. In early 2023, amid a foreign currency shortage and dwindling international reserves, Argentina signed an agreement involving a large expansion of a renminbi currency swap line extended by the People’s Bank of China.
In the following months, the renminbi rapidly gained ground as an invoicing currency in Argentina for a large share of imports from China. While previously nearly all imports from China were invoiced in dollars, the renminbi share reached about 50% by mid-2023. Hundreds of Argentine companies had switched from US dollars to renminbi as a payment currency for foreign imports. This included makers of electronics, auto parts and textiles, as well as oil and mining firms. Renminbi use also spread, to some extent, to imports from other countries.
Later that year, after the presidential election of October/November 2023 that unexpectedly brought Javier Milei to power and ushered in economic policy changes, the de-dollarization trend reversed, and the US dollar regained prominence as an invoicing currency, with renminbi invoicing declining to less than 10% of imports from China.
Currency choice with heavy government intervention
Our work departs from the existing literature by analysing invoicing currency choices in an emerging economy context where government policies play an important role – against the backdrop of a foreign currency shortage and a currency crisis.
Our setting is relevant because it is precisely through loans to emerging economies in crisis situations that China’s government could promote the internationalisation of the renminbi (Georgiadis et al. 2021). In fact, many of China’s swap lines have been signed with emerging economies that faced currency crises and were in need of external financing (Horn et al. 2021).
Rich micro data from Argentina
To illustrate the mechanisms at work, we construct a rich and novel dataset of Argentine firms’ international trade transactions, bank-to-firm loans, and bank balance sheets. The trade data consist of the universe of import and export transactions from January 2022 to June 2024. The data identify the Argentine firm involved, the product and value of the transaction, and the invoicing currency used.
The second dataset, on bank-to-firm loans, is provided by the Argentine central bank and reports the outstanding loans of each firm with each bank at a monthly frequency over the same period. Finally, we use balance sheet data for each Argentine bank. As a key feature, they report total loans broken down by currency.
A rapid switch of invoicing currencies
Figure 1 shows the rapid increase – and subsequent fall – of renminbi invoicing for Argentine imports from China. It plots the share of transactions invoiced in renminbi (in black) and the share of imported value in renminbi (in blue). We observe a very large and fast transformation in the invoicing currency shares for imports from China during the months after the swap agreement with China was expanded.
Between January and September 2023, the renminbi share of transactions increased from 1% to 38%. Similarly, the renminbi share of value grew from 0.4% to 48%. This pattern occurred across the board and was driven not solely by a few firms or a few products. By September 2023, 32% of firms and 62% of HS 8-digit products had at least some transactions invoiced in renminbi.
Figure 1 Share of transactions invoiced in renminbi (black line) and the share of value invoiced in renminbi (blue line) for imports from China to Argentina from January 2022 to June 2024
Source: Benguria and Novy (2025).
The steep rise in renminbi adoption lasted until the presidential election of 2023. The election ushered in important changes in exchange rate policy and US dollar availability. The subsequent decline in renminbi invoicing was similarly steep and slowed down by March 2024, at which point the renminbi accounted for 9% of transactions and 13% of import value.
For context, invoicing in currencies other than the US dollar used to be very rare for imports from China. In 2022 prior to the swap expansion, the US dollar accounted for 95.8% of these import transactions, followed by the euro (2.6%) and the Argentine peso (0.8%), with the renminbi accounting for only 0.2%. In 2023, the renminbi share jumped to 21.6% (averaging over the entire year, including the peak in September 2023).
Switching invoicing currencies abruptly is highly unusual
Episodes where a country switches invoicing currencies so abruptly are rare in the literature. For example, Crowley et al. (2024) find a swift decline in sterling invoicing for British exports in the years after the Brexit referendum. Benguria and Wagner (2024) show that Chilean exporters to euro zone countries start to adopt the euro after its introduction. But in all those cases, the switch is gradual and takes place over several years.
Our findings stand in sharp contrast to the notion that aggregate invoicing currency shares tend to be persistent and stable. We find here that in the context of a currency crisis and with significant government intervention, invoicing currency use can shift extremely quickly and substantially.
A severe dollar shortage makes renminbi invoicing attractive
With these data at hand, we explore the mechanisms driving invoicing currency choices. We find evidence of a foreign currency shortage mechanism, in line with the macroeconomic narrative. Firms having relationships (prior to the swap expansion) with banks that had higher US dollar loan shares were less likely to switch to renminbi invoicing later on.
Further, this effect was stronger during the period when the dollar shortage in Argentina was most critical. The timing of this effect matches the aggregate dynamics of the shortage, which peaked in the last two quarters of 2023 and eased following the presidential election.
The role of a Chinese state-owned bank
We also find that a Chinese state-owned bank with a large presence in Argentina (the Industrial and Commercial Bank of China, ICBC) played a separate and important role in spurring importing firms to adopt renminbi invoicing. ICBC was the sixth largest lender in Argentina before the swap expansion and had more than 100 branches across the country.
As Figure 2 shows, firms that borrowed from ICBC prior to the swap expansion were substantially more likely to invoice in renminbi afterwards.
Figure 2 Estimated time dummy coefficients from a regression using transaction-level data on imports from China to Argentina from January 2022 to June 2024
Note: The dependent variable is a dummy variable for transactions invoiced in RMB, and the regression includes time dummies and firm times HS8 product fixed effects. This regression is estimated separately for importers with an ICBC banking relationship (blue coefficients) and without an ICBC banking relationship (black coefficients). The coefficients correspond to the share of Chinese imports invoiced in renminbi.
Source: Benguria and Novy (2025).
Finally, we also find that large firms were more likely to adopt renminbi invoicing. The most straightforward interpretation is that operating in renminbi entails a fixed cost that larger firms are better able to bear.
Spillovers to imports from other countries
Having documented invoicing patterns for imports from China, we then examine firms’ renminbi use for imports from the rest of the world. As a reference point, before the swap expansion, the US dollar also dominated imports from other countries, with the euro holding a modest share in imports from Europe.
Our first finding is that after the swap expansion – and with the same timing as seen for imports from China – there was a sudden increase in renminbi invoicing for imports from other countries, followed by a matching decline after the presidential election. This pattern appears across many products and source countries.
At the firm level, we see that firms invoicing imports from China in renminbi were also substantially more likely to use renminbi for imports from the rest of the world. This finding suggests spillover effects in invoicing practices across countries. Firms with relationships to ICBC and banks with lower US dollar loan shares were also more likely to switch to renminbi invoicing for non-China imports.
Overall, this evidence implies that if China can promote renminbi use for its own exports, spillovers may eventually spread renminbi use to trade between other countries as well.
Concluding remarks
Our results shed new light on firms’ invoicing currency choices. We show that in contrast to the prevailing view, invoicing currency patterns can shift rapidly – but only under specific macroeconomic conditions, particularly in the presence of a foreign currency shortage. Chinese efforts to internationalize the renminbi were partly successful in Argentina but they have not persisted. Nevertheless, our results support the view that renminbi internationalization may be possible if backed by appropriate institutional arrangements, especially central bank liquidity and commercial bank lending.
Source: cepr.org
