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Internationalization of the RMB-Current Status,Existing Challenges,and Future Steps


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Internationalization of the RMB: Current Status, Existing Challenges, and Future Steps

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Internationalization of the RMB: Current Status, Existing Challenges, and Future Steps
BA Shusong1 Abstract: In the thirty years since the reform and opening up, the Chinese economy has become increasingly integrated into the global economy. During the period of rapid increase in China’s GDP, international markets have had a corresponding increase in demand for the RMB. Furthermore, the volatile fluctuations in the major international currencies caused by the international financial crisis, and the changes in the patterns of international economic governance, have significantly expanded the demand for the Chinese currency. Stimulated by market demand, China has also taken a series of complementary measures to actively and steadily promote the process for internationalizing the RMB.

I. The Current Status
1. The value of RMB cross-border trade settlement has grown rapidly
In July 2009, Shanghai and four other cities launched a pilot for RMB cross-border trade settlement in order to facilitate trade and investment in China’s foreign trade enterprises, with an initial group of 365 participants. In June 2010, the scope was expanded from the original five cities to twenty provinces (including autonomous regions and municipalities) in the Chinese mainland, and from Hong Kong, Macao and the ASEAN member countries, to all countries and regions worldwide. As a result, a total of 67,724 enterprises joined the pilot. In August 2011, the pilot was further extended to the whole of China, so that RMB cross-border trade settlement now has no geographical restrictions, and business lines now cover trade in goods, services and other components of the current account, with the expectation that some areas of the capital account will also be opened. Promoted jointly through supportive government policies and by market demand, the value of RMB cross-border trade settlement has continued to grow rapidly. The settlement amount was 3.58 billion yuan in 2009, 506.34 billion yuan in 2010, and reached 2.08 trillion yuan in 2011 (Figure 1). As of late 2011, the total RMB settlement amount in the current account from Chinese banks had reached 2.58 trillion yuan.

1 Dr. BA Shusong is a Professor in Finance, a PhD Mentor and a Member of the Standing Committee of the Central Government Youth Federation in the People's Republic of China. Dr. Ba has been acting as the Deputy Director-General of the Financial Research Institute in the Development Research Centre of the State Council. He is also Chief Economist of the China Banking Association. (Acknowledgements to Dr. WU Bo from the head office of Bank of Communications for help in drafting this article.)

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Figure 1: The rapid growth of the value of RMB cross-border settlement (unit: 100 million yuan)

12000 10000 8000 6000 4000 2000 0 2009.7-12 2010.1-6 2010.7-12 706 35.8 4393

11224.3 9575.7

2011.1-6

2011.7-12

Source: China Monetary Policy Report, published quarterly by the People’s Bank of China.

2. Currency swap agreements continue to expand
Since December 2008, China has increased its monetary cooperation with neighboring countries and regions. As of the end of January 2012, the People’s Bank of China had signed currency swap agreements with a total value of 1,336.2 billion yuan with central banks or monetary authorities in fifteen countries or regions, including Korea, Malaysia, Hong Kong, Argentina, and the United Arab Emirates (UAE). In 2011, China renewed its existing swap agreements with Hong Kong and South Korea and doubled the amounts (Table 1). This means the RMB can enter the financial systems of these economies through official channels, promoting RMB settlement and circulation efficiency. Currently, some agreements have entered a substantive stage, and are playing an important role in easing liquidity tensions, promoting bilateral trade and investment development, and maintaining regional financial stability.
Table 1: Bilateral currency swap agreements signed by the People’s Bank of China Swap Amount Date Dec. 12, 2008 Jan. 20, 2009 Feb. 8, 2009 Mar. 11, 2009 Belarus Valid for three years, Mar. 23, 2009 Apr. 2, 2009 Jun. 9, 2010 Jul. 23, 2010 Apr. 18, 2011 Apr. 19, 2011 Uzbekistan Bank of Indonesia Central Bank of Argentina Central Bank of Iceland Monetary Authority of Singapore Reserve Bank of New Zealand The Central Bank of the Republic of 0.7 billion 100 billion can be extended by 70 billion mutual consent. 3.5 billion 150 billion 25 billion Central Banks / Monetary Authorities ( RMB) Bank of Korea Hong Kong Monetary Authority National Bank of Malaysia National Bank of the Republic of 20 billion 180 billion 200 billion 80 billion Notes

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May 6, 2011 Jun. 13, 2011 Kazakhstan Oct. 26, 2011 Nov. 22, 2011 Dec. 22, 2011 Dec. 23, 2011 Jan. 17, 2012 Bank of Korea Hong Kong Monetary Authority Bank of Thailand State Bank of Pakistan UAE Central Bank 360 billion 400 billion 70 billion 10 billion 35 billion The Bank of Mongolia The National Bank of the Republic of 7 billion 5 billion

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Renewed and doubled the swap amount. Valid for three years, can be extended by mutual consent.

Source: public documentation from website of the People’s Bank of China

3. RMB denominated transactions in the capital account continue to increase
In terms of RMB settlement for cross-border direct investment, since 2010, the People’s Bank of China has administered the pilot for RMB settlement in foreign direct investment according to principles which emphasize risk control and a steady and orderly implementation. In October 2010, Xinjiang took the lead in conducting a trial for RMB settlement in cross-border direct investment. In January and October 2011, the People’s Bank of China issued the Administrative Measures for Pilot RMB Settlement of Foreign Direct Investments (Measures) and the Measures on Administration of the RMB Settlement in Relation to Foreign Direct Investment, respectively proclaiming that designated domestic enterprises be allowed to invest directly in foreign countries with RMB and that overseas enterprises and individuals can also be specified to use the Yuan in carrying out direct investment in China. The accumulated value of RMB settlement for outward direct investment (ODI) from China was 20.15 billion yuan, and for foreign direct investment (FDI) into China was 90.72 billion yuan. With respect to RMB settlement of cross-border financial investments, in August 2010, China allowed foreign central banks, clearing banks in Hong Kong or Macao, and overseas financial institutions that participate in syndicated loans, to invest in the inter-bank bond market using the RMB. As of the end of 2011, fifty-one foreign institutions were allowed to enter the inter-bank bond market for investment. In December 2011, the RMB Qualified Foreign Institutional Investors (RQFII) system initiated a pilot wherein qualified domestic fund management companies and Hong Kong based subsidiaries of securities companies were allowed to invest in the domestic securities market with RMB capital raised in Hong Kong. Regarding RMB bank loans issued for offshore projects, in October 2011, China introduced Guiding Opinions on Domestic Banking Financial Institutions Extending RMB Loans for Overseas Projects, which allowed domestic banking financial institutions with the capacity to participate in international settlement to provide credit funds for various overseas projects being carried out by Chinese business organizations.
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4. The offshore RMB market in Hong Kong is developing quickly
Along with the advance of the internationalization of the RMB, the offshore RMB market in Hong Kong has developed quickly, making it the market with the largest stock of offshore RMB, the most complete range of related financial business operations, and the most innovative products. First, the stock of RMB in the Hong Kong market has increased rapidly. Since the beginning of the cross-border trade RMB settlement pilot, although there have been ups and downs, the stock of RMB in Hong Kong’s banking sector had increased from less than 56 billion yuan to more than 627.3 billion yuan as of November 2011. The main source has been the RMB capital received from mainland Chinese enterprises for cross-border trade settlement. At present, RMB deposits account for about 10% of all bank deposits in Hong Kong, ranking it as a major currency next only to the Hong Kong dollar and the U.S. dollar, and making Hong Kong the primary offshore market holding the most RMB capital. At the same time, institutions conducting RMB transactions in Hong Kong have increased from about 40 to 132 (Figure 2).
Figure 2: RMB deposits and the number of institutions dealing with RMB in Hong Kong

700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

Source: Hong Kong Monetary Authority

Second, there is a greater variety of RMB related financial business operations in the Hong Kong market. In addition to traditional financial business operations, such as those related to RMB deposits and loans, other affiliated business operations have had considerable growth. First, the issuing agencies for RMB bonds in Hong Kong have been diversified, and the issuance size has been expanding year after year. Since 2007, nearly 100 financial institutions, government departments, and multinational companies have issued a total of approximately 200 billion yuan of RMB bonds in Hong Kong. Second, Hong Kong financial institutions have been offering a variety of financial products denominated in RMB, including product portfolios related to interest rates and exchange rates, insurance products, bond funds, and so on. Third, the Hong Kong Stock Exchange (HKEx) has launched RMB-denominated securities
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products. In April 2011, the first RMB-denominated stock, Huixian REIT, started to trade on the HKEx. Fourth, with the introduction of the RQFII pilot in December 2011, RMB holders in Hong Kong were allowed to invest directly in China’s domestic bond and stock markets.

5. The RMB is beginning to play a role as an international currency
First, the RMB has become one of the major cross-border trade settlement currencies. The proportion of RMB settlement in China’s total foreign trade increased substantially from 0.04% at the end of 2009 to over 10% in the second quarter of 2011 (Figure 3).
Figure 3: The proportion of RMB settlement in China’s total foreign trade
12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2009Q4 2.57% 0.04% 0.73% 2010Q2 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 6.86% 10.22% 9.43% 8.88%

Source: Calculated using data from the People’s Bank of China and China Customs

Second, the RMB has been accepted as a medium of exchange in a wider range of neighboring countries where the circulation volume has been increasing and the RMB is commonly used for trade settlement and daily payments, especially in those neighboring countries with close economic and trade ties with China. Third, the RMB has established an exchange mechanism based on a marketized exchange rate with several foreign currencies. Currently, there are nine currencies being listed and traded directly with the RMB in the interbank foreign exchange market, the U.S. Dollar, Euro, Japanese Yen, Hong Kong Dollar, British Pound, Malaysian Ringgit, Russian Ruble, Australian Dollar, and the Canadian Dollar. In addition, the RMB can also be traded over the counter with the Korean Won, Thai Baht, Vietnamese Dong, Laotian Kip, Kazakhstani Tenge, etc., as well as being used in the inter-bank market in Yunnan Province where the RMB has recently started trading for Thai Baht. Fourth, some countries have begun to accept the RMB as a reserve currency. At present, the central banks of South Korea, Belarus, Malaysia, Thailand, Cambodia, Russia and the Philippines have announced that they will accept the RMB as a reserve currency. Although the proportion of the RMB in the national foreign exchange reserves is still low (for example, the proportion in the Thai foreign exchange reserves is less than 1%), this is a beginning for the Yuan to have an international monetary function as a reserve of value.
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Fifth, the RMB has attracted more attention in the international monetary system and in the area of international financial governance. The financial crisis in 2008 had an impact on the whole world and also exposed, to a certain degree, the drawbacks of the international monetary system which was over-reliant on the U.S. Dollar. It has become widely accepted that the international monetary system needs to be reformed, and a new diversified system corresponding to the realities of the international economic and financial situation established. In the turbulent international financial environment, the Chinese economy still maintained stable high-speed development, the RMB remained in a strong position with steady appreciation, and the acceptance of and demand for the RMB increased significantly in international financial markets. The People’s Bank of China and the International Monetary Fund (IMF) signed an agreement to purchase IMF bonds with a value of not more than 50 billion U.S. Dollars in September 2009; China also participated in the voluntary agreement transactions for Special Drawing Rights (SDR) to help IMF member states, particularly less developed countries, get timely access to convertible currency in response to the financial crisis. This has enhanced the stature of the Chinese currency in the international monetary system and has laid the foundation for the RMB to gradually create conditions whereby it can be included in the SDR basket of currencies.

II. The Existing Challenges
Although, stimulated by market demand, the internationalization of the RMB has achieved remarkable progress, it is still at a very early stage compared to the U.S. Dollar, Euro, Yen and other international currencies. In moving forward, there are still many challenges to be overcome.

1. The RMB cross-border settlement structure is unbalanced
First, there is an imbalance in the proportion of RMB settlements for imports and exports, with import settlement expenditures being much higher than export settlement revenues. The value of imports settled in RMB accounted for more than 80% of the total and the ratios between revenues and expenditures for RMB crossborder trade settlement in the first three quarters of 2011 were 1:5, 1:2.9 and 1:1.7 respectively, showing that despite some improvement, the trend towards a net outflow of the RMB has been difficult to change in the short term. This imbalance between outflow and inflow is an inevitable phenomenon which is to be expected during the early stages of internationalization, and it reveals the limited openness in the domestic financial market and the inefficiencies in the backflow channels for the RMB. Second, the proportion of settlements between the current account and the capital account is unbalanced. Capital account settlements began with a pilot and have been gradually liberalized, but are still very limited. In 2011, RMB settlements for ODI and FDI reached 110.87 billion Yuan; the capital account and current account RMB settlement ratio was approximately 1:19 (Figure 4). However, current account payments and settlements can be regarded as only a minor function of an international currency; compared to the total RMB investment and financing transactions in the
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capital account, the current account settlement amounts and room for their expansion are relatively limited.
Figure 4: The composition of the RMB cross-border settlement in 2011

FDI 4.14%

ODI 0.92%

Trade in Services and Other Current Accounts 23.78%

Trade in Goods 71.16%

Source: People’s Bank of China

2. The offshore RMB market in Hong Kong is still in the early stages of development
There needs to be more breadth in the offshore RMB market. First, RMB financial products in the Hong Kong market lack variety, and RMB based ETFs, derivatives and other innovative products are still being developed. As a result, the investment products available for overseas holders of RMB are still extremely limited. Second, the number of RMB market participants in Hong Kong needs to be increased, and their structure needs to be diversified. Offshore RMB market participants are mostly import and export enterprises which have established trading relationships with businesses on the Chinese mainland, overseas clearing banks, foreign correspondent banks, and branches of Chinese-funded financial institutions in Hong Kong, but the number of international financial institutions participating in offshore RMB market transactions needs to grow. Third, with the expansion of Hong Kong’s offshore RMB market, its influence on the mainland Chinese market is rising; this can significantly affect the efficiency of China’s domestic monetary policy. The depth of the market is also an issue. First, the stock of RMB in Hong Kong is limited, and growth is affected by fluctuations in international financial markets. As of November 2011, RMB deposits in Hong Kong banks increased to a record high of 627.3 billion yuan, but compared with the domestic Chinese stock and bond markets, which have a market value of more than 20 trillion yuan, this market is still very small. Moreover, influenced by turbulence in the international financial markets and fluctuations in the RMB exchange rate, the growth in RMB deposits has slowed. The value of RMB deposits in October 2011 was down 0.6% compared to the previous month (Figure 2), and the value in December 2011 was lower than in November of the same year. Second, the issue sizes and liquidity of RMB denominated products need
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to be enhanced. Presently, the spot and forward average daily trading volume for the RMB in the Hong Kong offshore foreign exchange market is only 1 billion to 1.5 billion U.S. Dollars, there are no active transactions for Yuan-denominated “dim sum bonds” in the secondary market, and the first RQFII pilot only reached an investment total of 20 billion yuan, of which 80% was invested in the domestic bond market and 20% in stock markets. Enhancing issue sizes, yields, and so on, of other RMB products will make them attractive alternatives to investors and increase their market liquidity. In contrast, the daily turnover in London, the world’s largest market for U.S. Dollar transactions, is about 500 billion U.S. Dollars, even higher than the U.S. Dollar trading volume in the United States. The London Inter-bank Offered Rate (LIBOR) has become the benchmark interest rate index commonly used in international financial markets. Compared to the importance of the U.S. Dollar London offshore market, the Hong Kong offshore market for the RMB still needs to be further cultivated and developed.

3. The degree of openness in the capital account and other investment channels is limited
Although the free convertibility and cross-border flow of the RMB in the capital account is not necessarily an imperative requirement for internationalizing the RMB, it is still a very important condition. However, the current amount of RMB settlements in the capital account is still very small, only accounting for about 5% of the total value of RMB cross-border settlement in 2011. Despite the fact that progress has been made in opening up the capital account in recent years, on the whole the degree of openness is limited. The qualification of participating institutions, approval process, investment and financing size, and capital flows, are still stringently controlled. Meanwhile, there are also strict controls on the ability to invest overseas RMB capital directly in the domestic stock or real estate markets, in cross-border financial derivatives, and in some components of the capital account including short-term debt. The limited openness in the capital account is reflected in the fact that domestic RMB cannot flow into overseas markets through the capital account, and the channels for overseas RMB investment to flow back into China are also restricted. These factors may constrain the acceptance of the RMB as an international currency. In addition, there are theoretical differences in the financial community regarding the approach to take in opening the capital account and the internationalization of the RMB. Supporters advocate that promotion of the latter is warranted to meet market needs; it is conducive to economic restructuring in China and a balanced international financial system from the long-term perspective. Opponents argue that if internationalization is promoted before the internal financial system is fully marketoriented from the national balance sheet perspective, only soft assets will be accumulated and Yuan-denominated hard assets will flow out. In their view, the internationalization of the RMB should only be promoted after the domestic financial system is fully marketized. Generally, though, it is anticipated that the RMB
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internationalization process and the necessary domestic financial reforms will proceed together.

III. The Future Steps
1. Expand the use of the RMB in cross-border trade and investment
The British Pound, the U.S. Dollar, the Yen and the Euro have historically played major roles as international currencies. The status of each currency was formed over time by relying on national economic and trade strength along with opening up the domestic financial system. The recognition of a currency in international markets is based on confidence in the respective country’s prospects for economic development and in the stability of its financial system. Therefore, improving the internationalization level of the RMB should be a step-bystep process in accordance with domestic and international market demand, and a natural by-product of China’s economic development and financial liberalization. International experience indicates that China should also gradually promote RMB settlement in cross-border trade, investment, and financing during the process of improving and opening the domestic financial system. The Chinese government has not yet set a clear timetable for the internationalization of the RMB, which reflects the pragmatic attitude of decision-makers and follows the strategy of steadily moving forward based on national economic development and market demand. In an environment of ongoing volatility among international economic and financial systems, the steady expansion of the use of the RMB in cross-border trade and investment will inevitably be a reflection of this pragmatic strategy.

2. Expand the “local – regional – global” scope for the RMB
First, the RMB should be used in neighboring countries. The RMB gradually began to circulate in neighboring states when it was used in border trade between China and these nations. Using the RMB for cross-border trade settlement was originally a spontaneous market activity, and it was strengthened and accelerated after China signed local currency settlement agreements with Vietnam, Mongolia, Belarus, Russia and other neighbors. Second, the RMB should be recognized as a regional currency. This step requires that the RMB should be used for the efficient settlement of international trade and crossborder investment and financing in neighboring countries and regions, that it should be accepted as a reserve currency, and to should gradually become the generally accepted international currency in the area. Third, the RMB should be globalized. It should become a generally recognized international trade settlement currency in financial markets around the world, to be widely used in pricing transactions for international financial institutions and as one of the important reserve currencies among the global foreign exchange reserves. It must be acknowledged that globalization of the RMB will take a long time. Currently, the RMB is widely used and circulated in the neighboring ASEAN member
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countries, some countries in Central Asia, as well as in Mongolia, Russia, and other neighboring nations. Over 180 countries and regions have had actual RMB crossborder settlement and payment transactions with China, and the Hong Kong offshore RMB market is beginning to take shape. In effect, the RMB has basically completed the first step, and is in the initial stages of the second step, but there is still a large gap between the RMB and the truly “globalized” international currencies like the U.S. Dollar and the Euro when it comes to recognition as international reserve currency.

3. Further develop the “settlement – denomination – reserve” currency functions of the RMB
First of all, the internationalization of the RMB will continue to promote its use as an important international trade settlement currency. Being the settlement currency for cross-border trade is the start of internationalization, and the pilot for RMB settlement of cross-border trade, initiated in July 2009, has greatly accelerated this process. At the moment, 10% of China’s foreign trades are settled with the RMB, and its function as a cross-border trade settlement currency has already been demonstrated. However, the proportion of trades settled with the RMB has been very low when Chinesefunded enterprises have not participated. It is difficult for the RMB to become an internationally accepted trade settlement currency, like the U.S. Dollar, in other countries, or for it to account for a significantly share of global international trade settlements. At this time, there is still plenty of room for expanding the value and proportion of international RMB trade settlements. Second, over time the RMB must create the conditions to make it the denominated currency in international financial markets. This requires efficient and well developed financial markets: not only should the domestic RMB market be quite mature and open, but also the overseas offshore RMB market must have sufficient breadth and depth. Meanwhile, there should be channels for smooth two-way RMB flows between domestic and foreign markets, so that RMB holders in international markets can conduct efficient RMB denominated cross-border exchange, investment and other transactions. This necessarily involves liberalizing the RMB capital account and reforming the exchange rate formation mechanism: two steps which should be pushed forward in the medium-and long-term together with other financial reforms in China. Third, it will inevitably take a long time for the RMB to become a global reserve currency. One of the main indicators of its international currency status is its proportion in international foreign exchange reserves. As of the third quarter of 2011, the U.S. Dollar still accounted for more than 60% of global foreign exchange reserves, followed by the Euro, the Pound, and the Yen (Figure 5), while the RMB, although accepted by several countries, accounts for a very small fraction of the total. Only when the RMB is widely used for international trade settlement and trading on international financial markets, when its value is relatively stable and it is relatively freely exchanged, will it be widely accepted as a reserve currency by more countries, eventually making it an important component in international foreign exchange reserves. This should be one of the long-term functional goals for the RMB.
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Figure 5: Currency Composition of Official Foreign Exchange Reserves (COFER)

Swiss francs Japanese yen 0.12% 3.78% Pound 3.88% Euro 25.72%

Other currencies 4.79%

US dollar 61.71%

Sources: International Monetary Fund (IMF) COFER, third quarter 2011.

4. Open the domestic market and cultivate the offshore RMB market
First, the domestic financial market must be improved and opened. A developed domestic financial market can provide solid financial support and infrastructure for the internationalization of the RMB. This requires, on the one hand, a domestic financial market with a complete sub-market, a wealth of RMB products, a large market size and stable and safe operating mechanisms, all of which must be combined with reforms in the RMB exchange rate formation mechanism, including the marketization of the interest and exchange rate formation mechanisms. On the other hand, the domestic market should be relatively open, allowing for the two-way flows between domestic and overseas RMB markets, and enabling it to fully absorb the flows of foreign RMB capital, which is closely related to the degree of openness in the RMB capital account. Second, the offshore RMB market in Hong Kong must be cultivated further. Considering that the RMB in the capital account is subject to a certain amount of control, cultivating the offshore market can expand the global use of the RMB and reduce the probability that international financial risks will be transferred to domestic financial markets. The close economic and trade ties between China and Hong Kong have made the latter the main distribution center for the RMB outside the mainland. As a mature international financial center, Hong Kong has the technological capacity to be an offshore RMB center, and the Chinese central government has indicated, through a series of policies, that it supports Hong Kong in this role. As a result, the scope of the offshore RMB market in Hong Kong is expected to continue to be enhanced in order to better meet the needs of existing offshore investors, to attract more international investors to participate in offshore RMB transactions, and to gradually form an offshore financial center for RMB transactions and currency circulation. On this basis, the market in Hong Kong will play a significant role in aggregating, disseminating, and promoting the acceptance and use of the Chinese currency in Southeast Asia and in an even broader international context.
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Third, channels to facilitate the cross-border flow of the RMB must be extended. When the stock of RMB in the overseas market reaches a certain level, there will be a heightened demand to be able to invest in the Chinese domestic market; thus, it is necessary to establish smooth channels to enable the two-way flow of the currency. Current account trade settlement is one of the channels for cross-border circulation, while investment and financing activities in the capital account are more diverse, more convenient and constitute a larger channel for RMB investment. Therefore, in addition to its use in current account settlement, the RMB must be allowed to be freely convertible in the capital account, under the assumption that risks can be controlled, and a wide range of cross-border channels must be established, promoting a positive cycle in the cross-border circulation of the RMB.

5. Open the capital account as RMB cross-border business develops
The capital account is a general term for the capital and financial accounts in the international balance of payments, including capital transfers, direct investment, securities investment, credit services, and other investments. To date, China has fully or partially opened more than two-thirds of the forty accounts stipulated by the IMF; for example, there are basically no restrictions on FDI and ODI; bank credit for international trade or international projects has been largely opened; cross-border investments in the inter-bank, stock, and bond markets are also open under certain conditions. Only about one-third of the items included in the capital account, such as direct cross-border securities investments, derivatives trading, and short-term debts, are still under stringent regulation, which includes limited pilot projects, controls over total value, and even complete restrictions. It can be expected that the strict controls over the capital account will be gradually eased in the internationalization process. However, the opening up of the capital account cannot be achieved in only one step, and the internationalization of the RMB cannot wait until the capital account is completely open. In the future, the opening up of the capital account will occur together with RMB denominated cross-border business, and therefore they will inevitably develop together and promote each other. Specific measures intended to increase access to the domestic capital account include expanding the value of RMB-denominated “panda bonds” issued by foreign institutions in China, allowing foreign companies to issue RMB-denominated shares in China’s stock market, encouraging Chinese enterprises to make ODI with the RMB, allowing more offshore RMB to be invested in the domestic real economy or securities market by FDI or RQFII, and using the RMB for foreign investment and aid. Undoubtedly, foreign experience shows that controls over the capital account are necessary, and hasty or excessive openness in the short term is likely to lead to sizeable international capital flows which will be difficult to control. If these cannot be properly managed, they may impact on domestic asset prices and the stability of financial markets. Therefore, the internationalization of the RMB should be advanced in an orderly progression, so that the process of opening up the capital account can match the demand for cross-border RMB flows, be parallel to the process of
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reforming and re-constructing the domestic financial market, and adapt to regulatory requirements for preventing the negative side-effects of international capital flows. The process of opening up the capital account should be managed appropriately, so that it can become an important driving force in further enhancing the internationalization of the RMB.

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future development of a political and economic ...So RMB Internationalization is necessary and urgent...This article studies the current situation and ...
人民币国际化的现状、障碍与对策建议.doc
The current situation is: RMB currency as payment and settlement has been ...Key word: RMB internationalization;Process; Status; Obstacle;Strategy. III ...
Research on RMB Internationalization under Reform of ....pdf
the voice of reforming of the current international currency system is ...The impact of global financial crisis on RMB internationalization and counter ...
Regionalization of the RMB and China’s Capital Account ....pdf
measures to make RMB a future international ...At present, the internationalization is restricted ...its political and economic status in the world. ...
Effect of RMB Internationalization_图文.ppt
RMB Convertibility and Internationalization is a ...tracks into one: current account convertibility ...Thus, the future of globalization may well depend...
人民币国际化对河南进出口贸易的影响毕业论文.doc
present, with the rapid development of China's ...strength, international status has gradually ...The degree of RMB internationalization and the ...
基于国际金融危机背景下的人民币国际化研究_图文.pdf
theofthefinancialcrisisandthecosts causes andbenefits ofinternationalizationofRMB.intheexitingsystemcurrent Myconclusionsare:(1)The existingdeficiencies oftheround ...
...of RMB Exchange Rate and the Internationalization of RMB ....pdf
The Choice of RMB Exchange Rate and the Internationalization of RMB under the Financial Storm_金融/投资_经管营销_专业资料。僦 量 T hl 黪Ma iD R 秘繇...
人民币国际化的障碍与对策研究毕业论文.doc
and the growth of comprehensive national strength, the international status of...significance, this essay analyses RMB internationalization present situation ...
人民币国际化对我国进出口贸易的影响研究.doc
economy and strength, China's status in the international gradually increased...The internationalization of RMB is closely related to the development of ...
浅析人民币国际化之利弊.doc
The internationalization of the RMB is Chinese economic development and international status gradually increase brought about by the inevitable result. It also ...
国际主要离岸金融中心人民币业务发展现状及前景.pdf
Finally, based on the current situation of international offshore center, it...depth, coordination, and jointly promote the internationalization of the RMB....
人民币国际化对我国企业全球化经营的影响.doc
and the internationalization of RMB, which makes ... economic globalization challenges for Chinese ...Future of the Yuan: China's Struggle to ...
人民币国际化的必要性和路径选择.doc
Surely, it has taken into account the existing condition and the ...Key words: RMB internationalization;Necessity ;Path selection;International ...