Whether RMB Is Internationalized Ultimately Depends On Its Essential Function.

RMB will become a widely used international currency in the next 5 years. If China's financial market and currency continue to reform and its capital account is more open, the RMB will become an international reserve currency in the next 10 years.

And to become a safe haven currency, the government needs to be more open and pparent, the central bank is more independent, and the corresponding sound judicial environment.

He also predicted that the renminbi would weaken, but would not replace the US dollar's dominance in the international financial market.

Li Yang, vice president of the Chinese Academy of Social Sciences, believes that the internationalization of the renminbi is mainly the role of the renminbi as a trading currency, that is, because of the need for Chinese goods in trade, it is necessary for the renminbi to leave the renminbi and trade.

But in fact, the position of the renminbi as a trading currency has not yet been achieved.

As a financial investment, the renminbi as a reserve currency is far away as a safe haven currency.

Flexible in implementation

On the other hand, Li Yang pointed out that the relationship between China and other countries depends on interest rates, and the exchange rate depends on interest rates in the short term.

At present, however, the lack of marketization of interest rates in China is a big problem.

Therefore, the internationalization of RMB must first achieve the marketization of domestic interest rates.

In addition, he believes that capital account liberalization does not constitute a necessary condition for RMB internationalization.

Li Yang said that capital account liberalization has three conditions: first, is the market acceptable?

And market mechanism.

The second is whether there is a good rank and whether the government can cope with these situations properly.

The third is whether there is a good time window, which is very important.

China's executive director of the International Monetary Fund, Kim Chung Xia, believes that the internationalization of RMB will ultimately depend on free floating of the RMB exchange rate and capital account convertibility.

He pointed out that, at present, all developed countries and major

Countries (including BRICs) have opted for a free floating exchange rate or a near free floating exchange rate system.

The main tool used by these countries to regulate the balance of payments is exchange rate rather than capital control.

Therefore, China should overcome the fear of capital account liberalization and exchange rate fluctuation.

As for whether capital account liberalization constitutes a necessary condition for the internationalization of RMB, Huang Yiping, a professor at Peking University's National Development Institute, said that historically, it may not be, but whether it can still be doubtful in the future.

Whether RMB is internationalized will ultimately depend on the essential function of money - whether pricing, payment and savings are internationalized.

He also believes that, generally speaking, the liberalization of capital account will do more harm than good to China, but the precondition is to straighten out the domestic interest rate market and improve the financial system.