RMB Internationalization Will Not Happen Overnight.

Strong economic strength does not mean that the country's currency can become an international currency.

Some people believe that China's economic strength can surpass the US in the predictable time, which will support the RMB becoming an international currency in the corresponding time.

In fact, as early as 1894, the US GDP ranked first in the world. By the year of 1913, its industrial output value was equivalent to the sum of three industrial output values in Britain, France and Germany, but until the signing of the Bretton Woods Agreement in 1944, the US dollar established the status of the international core currency.

From GDP to the first place in the world, the United States has replaced the pound sterling into the international currency, and the United States has been using it for 50 years.

Obviously, without considering the internationalization of other currencies, the total economic volume of China is far from the top of the world, and RMB internationalization is unlikely to be realized in the short term.

The "double surplus" of the balance of payments determines that China will not be able to provide enough RMB to the world in the short term.

For a long time, China's consumption is insufficient, the growth of GDP mainly depends on investment, and a large number of goods and services created by investment can not be fully absorbed in China, and must be exported to other countries through export, resulting in current account surplus.

As an important emerging market country, international direct investment and financial capital have entered China in a long and large way. Under the capital account, there has also been a favorable balance of capital net inflow.

Since 1994, China's balance of payments has always been a "double surplus". It is expected that in the longer term, the "double surplus" will not be reversed.

Under the current circumstances, the monetary authority can only pfer renminbi to the international market through currency swap, or expand the capital outflow of RMB and reduce the scale of capital account surplus, but these methods can only be applied in a short time.

RMB has not become the main international reserve currency for a long time.

On the one hand, China's comprehensive economic strength is not enough to support the choice of RMB as an international reserve currency by important economies. On the other hand, China's financial market is not sound enough, and its capacity and depth are not enough.

These two aspects may explain why countries.

We have to hold large amounts of US dollar assets.

The capacity of the financial market is not enough, so we can not rush to fully open the capital account.

For China, the full liberalization of capital account means that the domestic financial market is completely exposed to the free impact scenario of global capital. If the capacity of the financial market is not enough, it is difficult to resist the capital shock from the whole world.

Especially when the capacity of the bond market is not big enough, a large amount of capital will enter or flow out of the Chinese market, which will cause interest rates and bond prices to rise sharply or fall, which will directly harm the real economy.

Comparing the current domestic and foreign financial market capacity of RMB and US dollar, the total fixed income market which the United States chose for the global investors with less risk reached 38 trillion US dollars in 2012, accounting for 240% of the US GDP ratio, and by the end of October 2013, the total amount of China's bond market was only 4 trillion and 860 billion US dollars.

Due to the huge differences in market capacity, the impact of the same amount of international capital flows on the market is quite different under the same open environment.

RMB International Valuation currency function is the shortest short board of RMB internationalization.

The international valuation function of RMB refers to the function of RMB in the international scope of private use and official use.

Relative to RMB's international settlement function, at present

The international valuation function is lagging behind.

For example, although China has gradually become a major commodity consuming country and a large trading country, the number of imports of many varieties ranks highest in the world. However, the pricing power of global commodities is still concentrated in the hands of the developed economies in Europe and the United States, forming several commodity pricing centers mainly based on CBOT (Chicago stock exchange) agricultural products (000061, stock bar), NYMEX (NYSE) energy and LME (London Metal Exchange) nonferrous metals.

These pricing centers are based on historical inertia, acceptability of pactions, hedging channels and capacity.

As well as the completeness of hardware aided system, the pricing mechanism and price of commodities based on US dollar are introduced.

The currency is more likely to be chosen as the currency of trade valuation. The two is exchange rate changes. When the exporters and exporters choose to calculate currencies, they tend to prefer currencies with stable monetary policies and exchange rate policies; three, the degree of financial market development, and the exporters and exporters are more willing to choose the currencies with the lowest exchange cost and can be generally accepted by other traders. This requires that the issuer of the currency must have developed money market, capital market and foreign exchange market and perfect monetary market tools; four, the currency's convertibility level. If a currency has not become a freely convertible currency, then the risk and cost of foreign currency holding will be relatively high. This currency will be at a disadvantage position in the competition with other convertible currencies. Generally speaking, whether a currency can be used as an international currency is mainly related to the following factors: first, inflation, low inflation and stable currency value.

From these perspectives, the RMB's role as the international currency of valuation is still long.