RMB Internationalization Achieved Good Results

According to the central bank statistics, by the first three quarters of 2014, the amount of cross-border RMB settlement had exceeded 4 trillion and 800 billion, compared with less than 3 billion 600 million yuan in 2009. SWIFT's report shows that in July 2014, the market share of RMB in the global payment currency rose to 1.57%, and RMB ranked seventh in the most widely used global payment currency.

Over the past five years, with the rapid development of cross-border RMB business, the internationalization of RMB has taken a firm step. What is the current stage or state of RMB internationalization? What direction should we further develop and implement in the future? What factors do the future development depend on?

If we compare the development of RMB internationalization with the past development of the pound, US dollar and the slightly weaker yen and euro, the image is that the renminbi is still in the juvenile era, that is, the internationalization of RMB is still at a primary stage of development. At this stage, the cross-border use of RMB in the field of trade has been developing rapidly. At present, the most important achievement of RMB internationalization is related to trade in goods and services. But in the financial field, the level of RMB internationalization is still very low. For example, the scale of RMB used as cross-border loan currency is basically negligible; as the international investment currency, the RMB has just started and its scale is relatively small; the use of RMB in international bonds and derivatives trading is relatively limited; the scale of foreign exchange transactions is ranked ninth, but the actual share is not high; the renminbi as the official reserve currency of many countries is still very limited.

In short, in addition to payment and settlement functions, the development level of RMB in two other functions as international currency (trading currency and reserve currency) is still very low. It also shows that the use of RMB in the international financial field is only preliminary. The RMB will eventually become an international currency that keeps pace with the US dollar and the euro. In the future, we should push forward the four functions of loan currency, transaction currency, investment currency, reserve currency and so on.

In the next five years, the development of cross border use of RMB in the financial sector will depend on six factors.

The first is the demand and speed of capital export, which is very important for the internationalization of RMB. Capital export is an important means to promote the internationalization of domestic currencies. In the early days after the Second World War in the last century, the US Marshall plan pushed the US investment in Western Europe and became an important driving force for the internationalization of the dollar. In recent years, China has shown the attitude of a big trading nation to a big exporter of capital. At present, the pace of direct investment is accelerating step by step, which means that China's opening up to the outside world has reached a new level, and more and more domestic economic entities are willing to invest in cross-border areas. China has begun to show the face of a big exporter of capital. In 2014, China is likely to become a net exporter of direct investment. The pace of the future should move forward steadily, and the speed will also accelerate. In the long run, China's export of foreign capital will grow larger and larger. In view of the significant appreciation of RMB in recent years, the future value of the currency will be relatively stable. The expansion of China's capital export will continue to bring the demand for RMB to foreign investment and become a new important driving force for RMB internationalization.

The two is the openness of capital and financial accounts. In fact, the RMB has already realized the basic convertibility under the capital and financial account in the offshore financial center, thus creating offshore RMB market, but there are still many restrictions in the territory, or basically convertibility. Although the institutional framework of RMB reflux mechanism is basically constituted, the existence of many restrictions on RMB capital and financial accounts will inevitably restrict the function of RMB trading currency and reserve currency, resulting in the convenience and risk avoidance function of RMB as international currency, which is much inferior to that of the US dollar and the euro. The willingness of the international community to hold renminbi will be weakened. At present, China's capital and financial accounts are not open enough. There is still a certain gap between the overall level of economic internationalization and the huge potential demand for capital export. The degree of openness of capital and financial accounts involves currency convertibility and the convenience of capital mobility and other key issues related to currency internationalization. In this regard, the gradual liberalization of control will largely contribute to the development of RMB internationalization, and vice versa.

The three is the marketization of interest rates and exchange rates. In the next five years, the internationalization of RMB needs to be breakthroughs in the financial field, and the marketization of interest rates and exchange rates is particularly important. With the development of RMB internationalization, some arbitrage arbitrage in some areas is inevitable. The key is how to make the interest rate and exchange rate mechanism more market-oriented so as to push the difference between different markets in a very short time. The higher degree of marketization of RMB exchange rate and interest rate will make the price of RMB as capital and currency more flexible, better regulate market demand and help to control interest rate risk and exchange rate risk, which will effectively boost RMB internationalization. On the contrary, while the internationalization of RMB is accelerating, the marketization of RMB exchange rate and interest rate is lagging behind, and the domestic RMB market is vulnerable to shocks. Monetary policy may be under great pressure, even in a relatively passive state.

The four is the development and perfection of domestic financial market. This is one of the most important factors for a country's currency to become an international currency. Why can the US dollar continue to be an international currency? Of course, it is related to the strength and conditions of the political, economic and military aspects of the United States, as well as the financial markets of the United States. shares The bond market is especially related to the development of the derivatives market. When faced with a crisis, it can hold us government bonds in US dollars, and the credit level of the US government is the highest among all government bonds. Therefore, the US dollar can always be strong in the crisis and become the target of people's pursuit. In fact, what people really pursue is not only the US dollar, but all kinds of products provided in the US financial market, and all kinds of investment products with relatively high credit rating. This shows that the investment and hedging function as an asset currency is an extremely important attribute of the US dollar to become an international currency. Therefore, for the internationalization of RMB, the development and improvement of domestic financial market in the future is very important. Without convenient investment, abundant products, large scale and opening to the outside world, it is almost impossible for the renminbi to become a real international currency. At present, China's financial market openness, market depth and scale It is not enough. Compared with the international market, derivatives are relatively single. The future financial market needs not only the expansion of the scale, but also the depth of expansion, especially the scale of the derivatives market. It also needs to expand the opening up to the outside world, so that the investors holding RMB abroad can make convenient investments in the market, or at least can use this market to control the exchange rate risk and interest rate risk of the RMB, which is very important for the next RMB internationalization.

The five is the global development level of China's multinational banks. From the process of currency internationalization, we can see that the expansion of the domestic banking system in the world provides an indispensable platform for the layout of the country's currency in the world. The main body of the loan currency is commercial banks. Domestic commercial banks and their overseas branches jointly promote lending business, which is an important factor to promote the development of RMB as a lending currency in the future. Through the global layout of the banking system, we can not only promote the RMB lending business, but also provide payment and settlement functions, which will help the landing of RMB internationalization strategy. At present, although Chinese banks are ranked globally, their internationalization is relatively limited. The 5 big banks are among the top 20 in the world, but only one of the most important banking systems in the world. Internationalization of Chinese banks is a long way to go. Internationalization of RMB and internationalization of Chinese banks should be synchronized and hand in hand.

Six is monetary policy Convergence with monetary environment at home and abroad. From the perspective of loan function, the convergence degree of monetary policy at home and abroad is not high at present, which makes RMB lending business difficult to carry out effectively. If the domestic banks make loans to the RMB for overseas projects, the RMB market interest rate is obviously higher than that of the major offshore international currencies, and the market basically has no demand. The offshore market in Hongkong also has a very limited demand for RMB loans because of high interest rates. But market conditions may change in the future. For example, if the US QE policy is to exit, it may take the road of gradually raising interest rates. If China's interest rate remains unchanged or decreases, the interest rate will gradually shrink between the US and the US. A few years later, if there is a gradual narrowing of the interest rate difference between domestic and foreign countries, there may be room for the development of RMB loans abroad. The emergence of such a monetary and financial environment depends on the economic operation and policy changes of the world's major economies, and should not be deliberately pursued. After all, the macroeconomic policy of the whole economy is more important than the demand for monetary internationalization. Therefore, we have to wait for the right opportunity. In the future, we should seize the opportunities that may arise in time and accelerate the pace of RMB lending overseas.

In the future, the internationalization of RMB needs to be breakthroughs in the financial field and has a very close logical relationship with the above aspects. It can be said that the internationalization of RMB has gradually entered the deep water area. The reform and opening up related to the next step may be the task of tackling difficulties and tackling difficulties, and are accompanied by certain risks. With the development of RMB in the financial field, the authorities should advance the risk control research on the further internationalization of the RMB as soon as possible, make plans, and plan ahead with the corresponding measures, so as to prepare for the rainy day.