Investment Risk Of RMB Convertible Freely

In recent days, Zhou Xiaochuan, governor of the central bank, delivered a speech at the IMF forum, saying that the Chinese government has an unwavering determination to join the RMB in Beijing, and said its significance is no less than that of Beijing's bid for the Olympic Games.

This seems to indicate that

We began to step up the internationalization and free convertibility of RMB.

If RMB can be freely convertible, what will be the impact and change on the investment and financing market? In this regard, Jiaxing Reed, a well-known domestic wealth management organization, has made some interpretations.

First, I want to know why.

It is not freely convertible. We must first understand the balance of international trade and international trade.

The balance of payments in international trade is reflected in an accounting statement known as the balance of payments.

A country

The table is an accounting account made according to specific international accounting standards. Almost all economic activities of a country can be expressed in this balance sheet, including foreign import and export trade, investment, finance and so on, all of which represent the balance of payments in the form of currency.

Among them, goods and services, that is, ordinary import and export trade and foreign trade in services, such as construction services, advertising, consulting, computer services and so on, and other business services, most of the international trade that Chinese people encounter in their lives, are all goods and services.

In addition, another big project is revenue, including international remuneration, investment income and so on. There are also frequent pfer projects, including government investment and assistance.

These three items are called regular items.

Another big project is capital and financial projects.

Among them, financial projects account for a large proportion, including direct investment, securities investment (including stocks) and other investments.

At present, the free convertibility of the renminbi has only opened the contents of the recurrent items mentioned previously, while capital and financial items do not allow the renminbi to be freely convertible.

In the world, only regular items and capital and financial items can be freely convertible, then they can be called freely convertible currencies.

Most of the trade in the world is carried out among members of the IMF countries. Among the member states that have joined the IMF, there are mutual agreements among the member states. Our country now only promises to exchange currencies freely with other countries under regular items, that is, the exchange between RMB and foreign currencies can be exchanged.

The promised freely convertible currencies include the US dollar, euro, Japanese yen, pound sterling, Hong Kong dollar, Swiss franc, Singapore dollar, Swedish Crown, Danish kronor, Norway kronor, Canadian dollar, Australian dollar, Macao dollar, Philippines pesos, Thailand baht, Han Guoyuan and so on.

At home, the Shanghai free trade zone is currently promoting the free convertibility of RMB capital account.