historical experience shows that with the strength of a country’s economy, the process of internationalization of the national currency will be greatly accelerated. Sixth China International Private Equity Forum held in Tianjin on June 10 at the annual meeting Yujiapu forum, experts believe that although the process of internationalization of the RMB is facing a capital account convertibility constraints, but the key to internationalization of the RMB is demand-driven, only through reform to strengthen their own financial system, provide the trust of financial products to international investors in order to truly consolidate the basis of the internationalization of the RMB.
trade settlement demand-driven process of RMB internationalization
the State Administration of Foreign Exchange deputy director Wang Xiaoyi said that the convertibility of the RMB to RMB internationalization is an important step of China towards the international community. “Although China is now the second largest economy, but when the RMB as a reserve currency, trading currency, can be called real economic power.” He said.
Chinese entities, economic development and trade after China’s accession to the WTO, the yuan for foreign currency exchange capacity is increasing, but more and more varieties. So the first step of internationalization of the RMB as a settlement currency of the functions of the recognition of the extent of the internationalization of the RMB market, the degree of international investment, as well as the degree of trade transactions increased, making the parties fully aware of the yuan is a long-term holding, as well as can be investment currency.
In addition, the RMB exchange rate, interest rates market-oriented reforms to promote the yuan price for inside and outside the two markets, consistent value. “But if the cross-border capital flows be hindered, or offshore renminbi can not be a valid return, give the holder of the yuan have a big impact, and also to some extent, affect and hinder the process of internationalization of the RMB.” Wang Xiaoyi said.
Tsinghua University, China, and Li Daokui, Director of the World Economy Research Center pointed out that the process of internationalization of the yuan is an integral part of China’s economic development. Very fast growth rate of trade between ASEAN and China, but mainly through the U.S. dollar clearing after the 2008 financial crisis, the dollar’s liquidity difficulties, currency instability, lead to trade in this region is also greatly affected and losses This is why the yuan does not yet have international conditions, the reasons for international use, and promote the development of the real economy to trade in this area to provide a relatively stable condition. “
Bank of China (601,988, stock it), chief economist Cao Yuan Zheng pointed out: “With the development of international trade, the hands of some foreign investors to hold the renminbi positions which need to arrange for the yuan investment channels.”
practical experience, currency internationalization of the first step is to promote cross-border trade settlement in Hong Kong is the only offshore yuan center, the most abundant of the renminbi products, the most mature offshore trading center. However, Cao Yuan Zheng pointed out that the yuan truly international third-party use, “If the yuan into the multilateral arrangement is truly international.”
capital account controls should not be regarded as the internationalization of the RMB disorders
the current process of RMB internationalization faced with the constraints of capital account convertibility. Capital account convertibility for the past 20 years, but in recent years required to speed up the process of increasing demands, but it is indeed a complex and gradual process. “Said Wang Xiaoyi. The problems faced by the yuan’s further internationalization process is relatively slow development of the offshore market to restrict the range of investment projects and RMB settlement started relatively late, and the capital account open.
In recent years, the SAFE to take measures to speed up the process of capital account convertibility, such as gradually increase the amount of the QFII investment for foreign investors in the territory of a larger space. The addition yuan since last December, RQFII pilot.
Wang Xiaoyi, capital account convertibility is not a prerequisite for internationalization of a national currency, in accordance with the International Monetary Fund’s capital account management in Appendix, full convertibility of the currency little, even with SDR dollar currency. “the process of capital account convertibility is basically a country’s monetary authorities or financial authorities, according to the extent of the country’s economic, trade and currency liberalization progressive realization of the release; the internationalization of a country’s currency is through both supply and demand in the market through trade or investment-driven. In the long run, this is a mutual promotion and mutual advance.
former MOFTEC chief negotiator, Long said, capital account liberalization is not necessarily a prerequisite for RMB internationalization, the internationalization of the RMB key is demand-driven. The faster the process of internationalization of the RMB, the yuan fully convertible timing will be more and more mature, so the process of internationalization of the yuan, to promote the full convertibility of the capital project when the internationalization of the RMB to a certain extent, more welcome yuan investment and more countries are willing to RMB as a reserve currency, capital account liberalization is straightforward. “
Cao Yuan Zheng
recommendations can be considered under the capital account in RMB-denominated open. Capital account is not open to foreign investment, but open on the yuan. “Cao Yuan Zheng, open in the capital under the name of the currency can be regarded as the liberalization of capital controls, with the yuan’s further extensive use and development of domestic financial markets, capital controls disappear is likely to be a matter of course.
the basis of the internationalization of the RMB on the development of its financial industry
Wang Xiaoyi said, to achieve capital account convertibility must establish a stable financial markets, the prudential supervision of the financial system, so that the economy has maintained long-term stability. Cao Yuan Zheng also pointed out that any of the internationalization of the currency must be a large and reliable financial markets as a support, but the relatively slow development of financial markets in China.
Li Daokui that the RMB internationalization is not alone is its name, historical experience shows that a country’s currency as the international currency process is also often a tremendous impact on the process of economic development. RMB internationalization is a gradual, pragmatic, very careful and long-term process, in this regard must learn the lessons of Japan. “Li Daokui said the yen’s internationalization process, a lot of money, the international capital expect the yen appreciation of, into Japan, causing the bubble economy. Li Daokui reminded that the internationalization of the RMB should not be based on the rise. The exchange rate is an important part of the monetary policy of any country should maintain a certain stability in the exchange rate issue, if the offshore market development is too fast, currency trading scale, it is easy to form a variety of RMB exchange rate mechanism.
the influence of a currency only to establish on the basis of the appreciation is unstable, the internationalization of the RMB should be the basis on the development of China’s financial industry. be able to issue RMB-denominated financial products, can really the basis of the internationalization of the RMB to do it. RMB internationalization is a major bottleneck that we have not to investors, including international investors trust of financial products, if this one can not do any internationalization of the currency will be a castle in the air, China’s own reform of the financial system is the most important. “said Li Daokui.
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