The move has been partly attributed to funding shifts ahead of October's reform of money market funding and partly to other factors such as the relative costs of borrowing in the two currencies across countries as yields staged a significantly more determined march upwards in the U.S. and the dollar's strengthening momentum continued.
The review also highlighted the growing importance of Chinese and Russian banks with the latest – although, admittedly, incomplete - data set revealing China to be the eighth-largest cross-border creditor in the international banking market and Russia the 19th largest. This shows a noteworthy step-up from only June 2016 when figures showed China to be the 10th largest and Russia the 23rd.
Simultaneously, the rapid rise of yuan use was highlighted in the review, with claims the Chinese currency's turnover has approximately doubled every three years over the past decade and a half with total daily turnover now above $200 million – or equal to 4 percent of global FX turnover.
These activities make the yuan the eighth-most-traded currency in the world – ahead of the Mexican peso and only slightly lagging the Swiss franc and Canadian dollar.
The review also sketched out a snapshot of the foreign exchange markets, saying over the last three years, hedge funds, non-financial end users and smaller banks have lessened their market presence as institutional investors upped theirs, mostly for hedging purposes.
The sharp drop – around 30 percent in spot markets and 22 percent overall – in foreign exchangea ctivity conducted via prime brokers, as banks reassessed strategies for these divisions, was also highlighted.