How Do We See The Ambition Of RMB Internationalization?

How do we see the ambition of RMB internationalization?

In the near future, the renminbi is undoubtedly the focus of the global market.

Li Daokui believes that the US has increased 20% relative to the main currencies, but the yuan has hardly depreciated against the US dollar, so the devaluation is reasonable.

The leaders of all circles expressed their views on the above issues at the forum of "the ambition of RMB internationalization" co sponsored by the 2015 annual meeting of the new leaders of the world economic forum.

The forum includes Li Daokui, director of the Su Shimin scholar program at Tsinghua University, Professor Huang yping, Peking University National Development Institute, and the world economic forum.

"Action initiative President AndersBorg, Professor Takenaka Hirahide, School of policy management, Keio University, and LordTurner, chairman of the new economic thinking Institute.

Li Daokui: "big country economy" should take account of the whole world

Li Daokui believes that the timing and logic of the RMB exchange rate reform are very correct, but the results are somewhat unexpected. It is evident that China will begin to consider the impact on the global economy in the process of constantly displaying the economic strength of great powers.

In terms of timing, Li Daokui thinks that China's foreign exchange is usually reelected in summer (July 11, 2005, June 19, 2010, August 11, 2015), because summer is a holiday in Wall Street, and try to avoid global overreaction. Therefore, reform is wise when there is no hype.

Logically speaking, in recent years, the United States has increased 20% relative to the main currencies, but the yuan has hardly depreciated against the US dollar, so this devaluation is reasonable.

As for the final effect, Li Daokui said: "because we have overlooked one point. Although the renminbi is not an international currency, it may be a quasi international currency. As long as the RMB has a slight movement, the emerging market countries will also believe that China's economic base has its own problems, which will aggravate the" devaluation tide "of the region.

Li Daokui said: "this reform tells us that China's domestic reform, especially financial reform, must take into account the recognition of foreign countries in China, no matter whether it is right or wrong."

In addition, he also said that

We should relax a bit, form a hedge with the tightening of US monetary policy, form a two-way movement to emerging market countries, otherwise the global monetary conditions will tighten. China may not yet fully fulfill the international responsibility of RMB as a quasi international currency for the time being.

"I also suggest that the Renminbi should remain unchanged for the next few months in the year to avoid greater global impact."

Huang Yiping: "no bow in the bow"

Li Daokui's view is slightly different. Huang Yiping believes that the Renminbi should be further focused on the "package currency" instead of just looking at the US dollar. "If the renminbi moves for a while and then gaze at it, consider the new move after a year, then I think the fluctuation of the exchange reform will be wasted and the next time we have to start again."

In Huang Yiping's view, the exchange rate reform in August 11th coincided with the time. "In the past, we found more and more that the central parity of the yuan in the morning was not much related to the closing price of the previous day, so the market speculated that this difference was largely a reflection of our policy will rather than market factors.

Therefore, the core of foreign exchange reform is to place more of the middle price in the market. Referring to yesterday's closing price and the market factors this morning, I think the change itself is a very important step.

In addition, Huang Yiping also believes that if the RMB is internationalized, it will solve the problem of currency mismatch in China's international balance of payments, because if assets and liabilities are not the same currency, there will always be a risk of the balance of payments crisis.

"The United States has no such risk because its assets and liabilities are all dollars."

As for the internationalization of RMB, Huang Yiping said in an exclusive interview on the same day that a currency has three functions: valuation, payment and storage. Internationalization of the RMB is to play the three roles in the cross border market. Using the renminbi as the pricing unit of China's import and export products, as an investment and trade tool, it can allow the renminbi to be used as a final investment tool.

AndersBorg: RMB will remain strong.

For the future trend of the renminbi, AndersBorg said: "in the long run, there is no fundamental reason for the depreciation of the renminbi. I know that China has a relatively large manufacturing industry, but I do not think there is any fundamental reason for the depreciation of the renminbi to increase exports of products."

He said that in the short term, there will be some devaluation, but in the long run, if China's economic structure is healthy as a whole, the RMB will maintain healthy development. This is exactly what Premier Li Keqiang said in his speech in September 10th. He showed confidence in China's economy, so I believe the renminbi will remain strong.

AndersBorg points out in particular: "the important point is not to let exchange rate fluctuations be politically affected, because exchange rates are market-oriented and economic.

Besides, if China wants to play a more important role in the world economy, the opening of capital account should also be pushed forward step by step.

In his view, moderate fluctuations are understandable, and the Central Bank of China is most important to promote China's economic growth stability.

Turner: RMB internationalization can prevent capital outflow.

There is still concern about the internationalization of the RMB, but Turner said that only when the renminbi becomes an international currency can the situation of capital outflow be avoided.

He explained that there is a clear short-term capital flow in China.

"Three or four years ago, we could still understand the flow of China's foreign exchange reserves. According to our existing accounts and foreign exchange reserves, we could understand where the" hot money "came from, but recently we found that some cases were hard to explain.

As exchange rate fluctuations increase, capital accounts become more open and there are many foreign capital inflows, things are becoming more and more complex.

For exchange rate fluctuations, he also said: "if we look at the past 15 years, the fluctuations between the euro and the US dollar can only be explained by the change of interest rate or the competitiveness of the current account. Most of it is difficult to explain. In 80s, the situation in Japan has a large amount of capital flow, which has led to the fluctuation of exchange rate. It is hard to explain simply by the theory of depreciation or inflation."

Therefore, he believes that with the process of internationalization in China, there must be such consequences and must accept such consequences.

In addition to the RMB exchange rate itself, all sectors of the International Monetary Fund (IMF) will pay much attention to the "big test" launched in November.

Turner expressed support for the renminbi's accession to the SDR. "China will not enter this year or next year. This is mainly the trend. If I am a member of the Valuation Committee, I will fully support it."

With regard to the RMB's accession to the SDR, Takenaka Hirahide believes that China's economy is very large and its GDP scale is 2.3 times that of Japan. China has now become the second largest importer in the world. Therefore, China plays an important role in Global trade, and the role of money can not be ignored.

"If we put Renminbi into SDR, it will further promote the development of RMB financial market, which is what we want to see."

For the renminbi itself, although the role of SDR in the operational level is not prominent, the significance of RMB incorporation into SDR can not be ignored.

The inclusion of IMF in SDR means that the RMB has become the real world currency. It has become the official currency of the more than 180 member states of the IMF. It also marks the first time that IMF has taken an emerging economy as reserve currency, which will greatly raise the status of RMB in the international monetary Arena.

In addition, the introduction of RMB into the basket can increase the representativeness of SDR.

The GDP represented by Basket Currencies has continued to decline rapidly since 2000 (down to 40% in 2012). If the renminbi can be added to the basket, the GDP represented by basket currencies will increase considerably, and it will also greatly reduce its downward trend.

At the same time, the introduction of RMB into the basket can also improve the stability of SDR.

Some experts said that if the renminbi was added to the basket in the last assessment, the exchange rate fluctuation of SDR would be much lower than that of the US dollar, sterling and RMB.

According to the relevant calculation, it can be reduced by 13%, 21% and 17% respectively.

It is worth noting that Takenaka Hirahide reviewed the painful experience of Japan in 90s.

In the mid 90s, the Japanese government implemented a very comprehensive plan for financial liberalization. Many economies expressed strong support for it. "But because of the liberalization issue, there are many bad debts and some bad assets in this financial system, causing the market to be extremely volatile."

He said that the current policy of China is very critical. It is necessary to provide pparent information, appropriately deal with the problem of "shadow banking" and effectively eliminate bad debts. "These policies can support further liberalization of the market".