Water Skin: SDR Can Promote RMB Internationalization

The word "SDR" is very hot now. Not long ago, the G20 summit also mentioned SDR very much. He welcomed the International Monetary Fund, namely IMF, to bring RMB into the SDR package.

It is generally estimated that IMF will bring RMB into SDR at the end of this year.

So, what exactly is SDR? Literally, it is a special drawing right, a unit of account.

As we all know, there was a Bretton Woods system, which was based on the gold exchange standard of gold and dollar. The dollar was linked to gold, and the currencies of IMF member states were kept at a fixed exchange rate with the US dollar, that is to say, the dollar was the anchor of the domestic currency.

If the anchor is in the sea, the boat will not be dangled, and the dollar will be anchored. There will be no fluctuation in other currencies.

But when the US economy is in a crisis and the Americans give up the obligation to buy gold, the anchor is not reliable.

So everyone had the expectation of IMF SDR, and SDR was also called paper gold.

The value of the present SDR is determined by the current exchange rate of a basket of currencies consisting of four currencies: the US dollar, the euro, the pound and the yen. If the RMB can join the SDR, it will become the fifth currency in the basket.

What's the advantage of this? There are many advantages. IMF has one hundred and seventy eighty member states.

SDR can be used for bookkeeping, SDR becomes hard currency, and the basket of RMB entering SDR is also a quasi hard currency. This is also an important step for RMB to move towards international circulation.

SDR can promote the internationalization of RMB, but it is very difficult to join SDR. There are two prerequisites: first, the volume of trade in this country must be in the top four of the world; there is no problem in China; second, the currency of this country must be freely used in the world, and the international community has always believed that the RMB can not be freely circulated, and this hard lever has not been achieved.

So what is the flexibility of China? It means that with countries recognizing currencies and currencies as the reserve currency of the other side, we have signed contracts with many other countries, to a certain extent, to achieve free use.

Of course, there are two concepts in this free use. One is whether the two sides are denominated in Renminbi and how much trade is denominated in Renminbi. The other is whether there is free trade in the international market, especially whether there are long-term futures trading varieties.

Having understood these two points, we will know why the renminbi has been flashed and depreciated this summer, which is a condition for fully conforming to SDR. Because some people think that there is a gap between the central parity of RMB and the final paction price, and the middle price is offset.

What is the demand for free use of money? It also requires the market to be free. The government has no administrative intervention.

With this in mind, it is clear in general why the Chinese government responded strongly to IMF after the stock market bailout in July.

In other words, they think that this is against the principle of entering SDR, that is, the market is dominated by the administration.

Therefore, this is also an important reason why our leaders have to explain in different international situations.

During the past 50 days, Xi has already talked about the stock market for 5 times. The keynote is basically the same. Saving the market is an international example, nor is it a long-term behavior, in order to avoid systemic financial crisis. Now China's market is gradually recovering its self running function.

This is a basic keynote, which is related to SDR.

RMB entry

It has little impact on the lives of ordinary people. The advantage is that it helps to raise the prestige of the renminbi, the RMB is stronger and the scope of application is wider and wider, and the influence of the Chinese economy on the world economy is bigger and bigger, and it becomes a symbol of the strong national power of China.

What is the US dollar? The US dollar can go all over the world. This is the US dollar.

The renminbi must also become a hard currency, and it must finally achieve free convertibility.

Of course, there will be many misunderstandings.

If I go abroad, I can use the RMB to settle accounts on the Internet. It's not so simple.

Entering SDR is an important step in the internationalization of RMB, but there is still a certain distance between RMB and free convertibility. It takes 5 to 10 years to cool down.