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Convertibility as a step for the RMB internationalization

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  • Haihong Gao

Abstract

The paper concentrates on the issue of currency convertibility in the context of Chinese strategy of the RMB internationalization. It argues that the motive for that strategy was ignited by China’s dissatisfaction with the long lasting unstable international monetary system. Recent global financial crisis intensified China’s urge to get rid of “dollar trap” and look for a diversified international reserve currency system where the Chinese yuan could take a place. The paper investigates the step-by-step approach from the trade settlement to more comprehensive policy measures. It also emphasizes the importance of domestic financial reforms for the RMB full convertibility, including flexible exchange rate, market determined interest rate and deepened domestic financial market. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Haihong Gao, 2013. "Convertibility as a step for the RMB internationalization," Economic Change and Restructuring, Springer, vol. 46(1), pages 71-84, March.
    • Handle: RePEc:kap:ecopln:v:46:y:2013:i:1:p:71-84
    DOI: 10.1007/s10644-012-9137-0
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    1. Chinn, Menzie David & Frankel, Jeffrey A., 2006. "Will the Euro Eventually Surpass the Dollar As Leading International Reserve Currency?," Santa Cruz Department of Economics, Working Paper Series qt4hz4n9pb, Department of Economics, UC Santa Cruz.
    2. Dong He & Robert N. McCauley, 2010. "Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues," Working Papers 1002, Hong Kong Monetary Authority.
    3. Ronald McKinnon & Gunther Schnabl, 2004. "The Return to Soft Dollar Pegging in East Asia: Mitigating Conflicted Virtue," International Finance, Wiley Blackwell, vol. 7(2), pages 169-201, July.
    4. Agnes Benassy-Quere & Jean Pisani-Ferry, 2011. "What International Monetary System for a Fast-Changing World Economy?," Book Chapters, in: Jack T. Boorman & André Icard (ed.), Reform of the International Monetary System: The Palais Royal Initiative, edition 1, chapter 21, pages 255-298, Emerging Markets Forum.
    5. Menzie Chinn & Jeffrey A. Frankel, 2007. "Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 283-338, National Bureau of Economic Research, Inc.
    6. Haihong Gao, 2010. "Internationalization of the Renminbi and Its Implications for Monetary Policy," Palgrave Macmillan Books, in: Wensheng Peng & Chang Shu (ed.), Currency Internationalization: Global Experiences and Implications for the Renminbi, chapter 9, pages 209-220, Palgrave Macmillan.
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    Cited by:

    1. Xiaoguang Wang, 2020. "Leadership-building dilemmas in emerging powers’ economic diplomacy: Russia’s energy diplomacy and China’s OBOR," Asia Europe Journal, Springer, vol. 18(1), pages 117-138, March.
    2. Batten, Jonathan A. & Szilagyi, Peter G., 2016. "The internationalisation of the RMB: New starts, jumps and tipping points," Emerging Markets Review, Elsevier, vol. 28(C), pages 221-238.

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