New Internationalization Of RMB

At present, the initial conditions for RMB internationalization are relatively mature.

First, the proportion of RMB used as cross-border trade and investment settlement currency has increased. Second, with the increasing use of RMB settlement in international trade, diversified RMB financial products need to be provided to attract overseas Chinese institutions and individuals to hold renminbi assets. At present, the offshore RMB market has already formed a certain scale.

At the end of 2014, offshore RMB deposits in Hongkong, Taiwan and Singapore amounted to 1 trillion and 600 billion yuan, and the balance of offshore dim sum debts was close to 350 billion yuan; third, the Central Bank of China has now signed 28 currency bilateral swap agreements with 28 countries or regions, which has increased offshore liquidity and helped maintain offshore exchange rate stability.

Increasing the scale of overseas direct investment, promoting cross-border capital flows, diversifying market trading entities, and promoting market-oriented exchange rate formation mechanism will be necessary for the promotion of RMB internationalization strategy, which means that China still faces greater challenges in the construction of foreign exchange market and the promotion of capital account liberalization.

We believe that the implementation of the "one belt and one way" strategy will be the key to the establishment of the AIIB and the Silk Road Fund.

If the RMB internationalization process goes smoothly, China will get a lot of benefits, which includes the convenient trade settlement at the enterprise level, the reduction of exchange rate risk and the reduction of local currency.

It also includes the benefits of raising the efficiency of financial market allocation and increasing the independence of monetary policy.

But the path of RMB internationalization is not without challenge.

From yen

According to the lesson, the Japanese financial bubble burst and the capital outflow caused by the long term zero interest rate monetary policy made the internationalization of the yen stagnate or even retrogressed after 1990s. The Japanese yen accounted for 8.5% of the world's international reserve ratio after reaching a high of 1991, and continued to fall, accounting for only 4% in 2014.

It is very important to build prudent and stable macro policies, to promote market opening in an orderly way and to stabilize investors' expectations.

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The US dollar declined slightly on Tuesday (March 31st) and remained at the top of the 6.20 pass. However, the monthly rise in Renminbi exchange rate this month is still expected to be the most significant since December 2011. The reason is that China's policy formulation has entered the market to intervene in the RMB exchange rate so as to ensure that it can become a global reserve currency on the premise of stable currency.

Zhou Xiaochuan, governor of the people's Bank of China, earlier this month called on the International Monetary Fund (IMF) to add renminbi to its basket of "special drawing rights" currency. Before that, Yi Gang, the vice president, confirmed that the central bank is in full negotiation with IMF.

On Monday, the Central Bank of China decided to reduce the down payment requirement for the purchase of second housing units. Before that, the Ministry of finance of China also introduced a 1 trillion yuan local government debt pposition plan.

All of these policies have made the market confidence in China's economic prospects strengthen again, and it is also positive for the future trend of RMB.

On Tuesday, the US dollar traded on the 6.2025 line to the renminbi, which means that the RMB exchange rate is expected to increase by 1.07% in March, making it the best currency for the US dollar this month.

Tommy Ong, an economist at DBS bank, points out that maintaining the RMB exchange rate steadily and steadily is the best way to make RMB acquire the status of the global reserve currency.

The latest measures by the Chinese government have eased concerns about the domestic financial market.

Li Keqiang, premier of the State Council of China, pointed out in his March 5th government work report that China will strive to maintain a reasonable and balanced exchange rate of RMB and expand the international use of the renminbi.

In March, the central parity of RMB was raised by 0.09%, ending the two decline in 0.46% consecutive months. During that period, the US dollar index rose 2.3%, which means that the appreciation of RMB against non US currencies is more significant.

Since then, IMF will adjust the composition of SDRs in a basket of currencies in October. If the yuan is to be elected as soon as possible, then the status of China's second largest economy in the world will be further recognized, and the hegemony of the US dollar will be challenged.

However, Bernanke, the former chairman of the Federal Reserve, has also expressed calm about this. He said in his speech on Monday (March 30th) that the RMB will become the international reserve currency, but it is still a long way to go to achieve this goal.

On Sunday (March 29th), Zhou Xiaochuan also said that China will further liberalize its foreign exchange supervision measures during the year.

On Monday, the Central Bank of China has lowered the down payment ratio of two housing purchases to 40%, after Zhou Xiaochuan said that China's economic slowdown has been excessive, so policymakers can then maintain the stability of economic growth through interest rate policy and quantitative easing measures.

According to the survey, the Central Bank of China will reduce the reserve requirement ratio and the interest rate of deposit and loan again in the next few months.

Liu Ligang, chief economist of ANZ bank in Hongkong, said that with the help of appropriate policies, the goal of China's economic growth reaching 7% this year will not be a problem.