RMB Must Be Truly Internationalized After Entering The Basket.

Lagarde, President of the International Monetary Fund (IMF) recently issued a statement saying that the renminbi was in line with the "free use" monetary requirement. The Executive Board recommended that the RMB be freely available and that it should be included in the SDR basket in addition to the fifth currencies other than sterling, euro, yen and US dollar.

Insiders interpret this as "RMB's entry into SDR".

Finally, whether the renminbi can join the SDR remains to be announced at the IMF executive board meeting in November 30th.

So, does joining the SDR mean that RMB has been internationalized? What do we need to do to achieve real internationalization after we enter the basket?

According to the rules of IMF, RMB's accession to the SDR currency basket has also been officially recognized by more than 180 member countries, which can be used as the official reserve of these countries, and the fund of the international market should also increase the allocation of RMB assets.

Does this mean that the internationalization of RMB has been completed?

In fact, even if this time

The executive board voted that it will take several months for the renminbi to enter SDR.

Zhu Haibin, chief economist of JP Morgan, told reporters that the central bank has accelerated the pace of opening up the financial market, including the "8. 11 exchange reform" and the opening of interbank foreign exchange markets.

A series of measures such as the first phase of cross-border payment system and the completion of interest rate marketization have been recognized.

Zhu Haibin believes that the future decision-making level will continue to unswervingly push forward the strategic plan for comprehensively deepening the reform, and steadily push forward financial reform and opening up. Next, the new pilot initiatives for individual overseas investment (QDII2) in Shanghai pilot area and the extension of inter-bank foreign exchange pactions are expected to be launched within one to two months.

Song Yu, chief economist of Goldman Sachs and Gao Hua, also believes that the renminbi will be added.

It will have a significant impact on China's deepening of financial reform.

"If the renminbi is allowed to join the SDR as the main international reserve currency, it may stimulate China to modernize its financial system and make it match with other SDR currency countries."

Zhou Hao, a senior economist at Commerzbank, believes that joining the SDR is not an end, but a means of internationalization. It represents the beginning of a new round of financial reform, rather than "once and for all".

"If the renminbi enters SDR, it means that China's financial market will further integrate into the international market."

Zhou Hao told reporters that "to truly realize the internationalization of the RMB, we need to continue to promote capital account convertibility, enhance the regulatory capacity, strengthen risk prevention, further improve the RMB exchange rate formation mechanism, and develop financial derivatives tools."

In the view of Shao Yu, chief economist of Orient Securities, China's accession to the SDR means mutual recognition between China's economy and international rules. But in the short term, the growth of RMB assets in international reserves will be very limited, and the RMB will still be away from the real internationalization.

"RMB joined SDR only to get the" admission ticket "of reserve currency.

In the future, only by expanding the depth and breadth of China's financial market, optimizing the regulatory capability and strengthening the operational capacity of financial institutions, can the renminbi become a real international reserve currency.