Bungled efforts to mark a “managed” transition to a new currency regime notwithstanding, China seems generally to be doing a decent job of gradually paving the way for a world in which the yuan plays a far greater role in global trade and investment. That is, if we look beyond the recent FX market turmoil, the picture that emerges is one in which China has managed to convince Russia to settle oil imports in renminbi and in which the AIIB and Silk Road funds are set to help establish the yuan as the funding currency for billions in development projects. While we may still be years away from the fabled “yuan hegemony,” we got still more evidence on Tuesday that despite the currency’s rather uncertain medium-term trajectory and despite a still closed capital account, China is moving ever closer to establishing the RMB as a reserve currency. Here's WSJ: In August, for the first time, the yuan moved ahead of Japan’s yen for fourth place in a league table of the most-used currencies for cross-border payments compiled by Swift, the international payments provider. A “substantial” increase in usage of the currency in the final week of August was triggered by market volatility caused by concerns about the Chinese economy and Beijing’s devaluation of the yuan, Swift said in a report. the Chinese currency has been gaining traction. As recently as August 2012, the yuan was ranked No. 12 on Swift’s list with just a fraction of its current share of the global payments market. Astrid Thorsen, head of business intelligence solutions at Swift, said volatile Chinese markets spurred greater use of the Chinese currency, especially toward the end of August. China’s yuan recorded its biggest one-day loss in two decades in August after the country’s central bank surprised markets by devaluing the currency. The yuan had been strengthening for about a decade before the move, which Beijing said was meant to help shift the currency toward a more market-driven model. The devaluation was also viewed by many investors as a sign of growing concern among Chinese authorities about the state of the country’s economy, helping to fuel fears of a slowdown. The volume of foreign exchange trades in yuan hit more than 1 million for the first time in a single month in August, rising 50% from the same period last year and up 20% from July, “likely due to the devaluation…by the People’s Bank of China,” the Swift report said. “Trading [in yuan] was almost nonexistent five years ago but today ranks amongst the most traded currencies globally,” said Chris Knight, head of electronic trading for Asia at Standard Chartered Bank. “Given China’s role as a regional and global business hub at the center of economics and commerce, it has become critical for us to trade [it].” Here’s Bloomberg with more: China’s yuan overtook Japan’s yen to become the fourth most-used currency for global payments, shrugging off a surprise devaluation to rise to its highest ranking ever and boosting its claim for reserve status. The proportion of transactions denominated in yuan climbed to a record 2.79 percent in August, from 2.34 percent in July, according to a Society for Worldwide Interbank Financial Telecommunications statement on Tuesday. It was second for global issuance of letters of credit by value with a 9.1 percent share, compared with 80.1 percent for the U.S. dollar. The report comes as the International Monetary Fund prepares to conduct a twice-a-decade review of its Special Drawing Rights basket, which currently comprises the U.S. dollar, euro, yen and the British pound. China has been pushing the yuan’s case for inclusion, which Standard Chartered Plc estimated could trigger as much as $1 trillion of inflows into the currency. The People’s Bank of China on Aug. 11 devalued the yuan reference rate by 1.9 percent and switched to a more market-oriented fixing, spurring a 2.6 percent slide in the currency in August. "The data are positive for the probability of the yuan getting into the SDR basket," said Nathan Chow, an economist at DBS Group Holdings Ltd. in Hong Kong who predicted in January that the currency would surpass the yen in global usage this year. "It shows that the so-called devaluation in August, which wasn’t massive in value, hasn’t driven people away from using the yuan." And that shouldn't come as a surprise. As difficult as it sometimes is to look beyond today or tomorrow's crises, and as challenging as it will most assuredly be for China to successfully transition to an economic model led by consumption and services as opposed to investment and infrastructure spending, the market is still forward-looking and apparently, quite a few people still see a brighter future for Beijing and the paper they print than for Washington and "king" dollar.