Global Implications of the Renminbiâ€™s Ascendance
Macroeconomics Working Papers from East Asian Bureau of Economic Research
This paper evaluates the prospects for the renminbiâ€™s role as an international currency and the implications for global financial markets. Although the Peopleâ€™s Republic of China (PRC) does not have either an open capital account or a flexible exchange rate, the renminbi has attained considerable traction as an international currency on account of the PRCâ€™s rising shares of global trade and gross domestic product. Through bilateral swaps that the Peopleâ€™s Bank of China has established with other countriesâ€™ central banks, the renminbi is also becoming more prominent in international finance. However, the renminbi is unlikely to become a major reserve currency in the absence of capital account convertibility, a flexible exchange rate, and better-developed financial markets. The renminbiâ€™s rising prominenceâ€”if it is accompanied by significant economic reforms within the PRCâ€”could add to the stability of Asian and global financial systems.
Keywords: renminbi; Capital account liberalization; the people's bank of China; global financial markets; International currency (search for similar items in EconPapers)
JEL-codes: E5 F3 F4 (search for similar items in EconPapers)
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Working Paper: Global Implications of the Renminbiâ€™s Ascendance (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eab:macroe:24046
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