Arbeitspapier

Paths to a reserve currency: Internationalization of the renminbi and Its implications

In this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People's Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy: promotion of the use of the renminbi in the settlement of cross-border trade and investment, and liberalization of the capital account. We find that if we use only the quantitative measures of the economy, the predicted share of the renminbi in global reserves could reach 12%. However, if institutional and market variables are included, the predicted share comes down to around 2%, which is a more realistic prediction. By reviewing experiences of other reserve currencies, we propose a three-factor approach for the PRC authorities to promote the international role of the renminbi: (i) increasing the opportunities of using renminbi in the international community, which requires relatively rapid growth of the PRC economy and continuous liberalization of trade and investment; (ii) improving the ease of using renminbi, which requires depth, sophistication, and liquidity of financial markets; and (iii) strengthening confidence of using renminbi, which requires more transparent monetary policy making, a more independent legal system, and some political reforms. In general, we believe that the renminbi's international role should increase in the coming years, but it will take a relatively long period before it plays the role of a global reserve currency.

Sprache
Englisch

Erschienen in
Series: ADBI Working Paper ; No. 482

Klassifikation
Wirtschaft
International Finance: General
International Monetary Arrangements and Institutions
Financial Aspects of Economic Integration
International Policy Coordination and Transmission
Thema
RMB internationalization
reserve currency
anchor currency
capital account openness

Ereignis
Geistige Schöpfung
(wer)
Huang, Yiping
Wang, Daili
Fan, Gang
Ereignis
Veröffentlichung
(wer)
Asian Development Bank Institute (ADBI)
(wo)
Tokyo
(wann)
2014

Handle
Letzte Aktualisierung
10.03.2025, 11:46 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Huang, Yiping
  • Wang, Daili
  • Fan, Gang
  • Asian Development Bank Institute (ADBI)

Entstanden

  • 2014

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