The Peopleâ€™s Republic of Chinaâ€™s Financial Markets: Are They Deep and Liquid Enough for Renminbi Internationalization?
Prince Christian Cruz,
Yuning Gao and
Lei Lei Song
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Prince Christian Cruz: Asian Development Bank Institute (ADBI)
Macroeconomics Working Papers from East Asian Bureau of Economic Research
Domestic financial market development is a key determinant of a currencyâ€™s international status, and financial depth and market liquidity are two essential attributes for an international currency. This paper discusses the status of the Peopleâ€™s Republic of Chinaâ€™s (PRC) financial markets and their depth and liquidity conditions. The paper also compares the PRCâ€™s financial markets with those in developed and emerging economies, contemporaneously and historically. The paper finds that the PRCâ€™s financial markets are not as deep and liquid as those in developed economies, and are much less so than those with international currencies. To support the internationalization of the renminbi, the PRC needs to remove several major obstacles to deepen its financial markets and improve their liquidity conditions.
Keywords: financial market; financial development; financial depth; market liquidity; Currency Internationalization (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-mac and nep-tra
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Working Paper: The Peopleâ€™s Republic of Chinaâ€™s Financial Markets: Are They Deep and Liquid Enough for Renminbi Internationalization? (2014)
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