Issues for Renminbi Internationalization: An Overview

Barry Eichengreen and Masahiro Kawai ()

No 454, ADBI Working Papers from Asian Development Bank Institute

Abstract: This paper provides an overview of the potential international role of the renminbi (RMB). Reviewing the current state, the paper finds that much progress has been made on RMB settlements for trade involving the People’s Republic of China (PRC) and on RMB-denominated bond issuance in Hong Kong, China, but that RMB internationalization is still limited due to capital account controls. It argues that a high degree of RMB internationalization requires significant capital account liberalization, which in turn would call for greater exchange rate flexibility so that the central bank can enjoy monetary policy autonomy. This, however, would pose a challenge for PRC authorities as hasty capital account liberalization could expose its financial markets to the risk of crisis. The paper also emphasizes the importance of institutional reforms to make the RMB a truly international reserve currency.

Keywords: renminbi; yuan; international monetary policy; currency internationalization; foreign exchange; capital account liberalization; financial market (search for similar items in EconPapers)
JEL-codes: F31 F32 F33 F41 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-01-21
New Economics Papers: this item is included in nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Related works:
Working Paper: Issues for Renminbi Internationalization: An Overview (2014)
Working Paper: Issues for Renminbi Internationalization: An Overview (2014)
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