Macro-Finance Salon (No. 85): Experience and Prospect of RMB Internationalization

On December 20, the Macro-Finance Salon (No. 85) was held in Renmin University of China. Xia Le, senior research fellow of IMI, chief Asia economist at the Banco Bilbao Vizcaya Argentaria (BBVA) Research served as the keynote speaker and talked about “Experience and Prospect of RMB Internationalization”. Sun Lujun, member of IMI Academic Committee, director of CNIC Corporation Limited, IMI researchers Luo Yu and Peng Yuchao also attended the salon. IMI associate researcher Jiang Nan chaired the salon. Xia Le began with an introduction of the original intention and background of the RMB internationalization strategy and reviewed the three motives for China to promote this strategy in the past decade: to diversify reserve assets, internationalize purchases of overseas products and services, and force financial reform. Then he introduced several steps at the early stage: RMB cross-border trade settlement, the development of an offshore RMB center and more bilateral currency swap agreements. Considering Renminbi’s role in international settlements, in serving as the currency for many countries’ foreign exchange reserves and its inclusion into the SDR, Xia Le believed that this strategy has made significant progress. Xia Le then shared his views on the “811” exchange rate reform. He believes that in the specific phase with specific external environment, attention should be paid to the order of financial reform and uncertainties brought to exchange rate reform by RMB’s internationalization. We should learn from the “811” exchange rate reform and take corresponding measures in overseas RMB backflow, offshore market, onshore market and currency swaps. Xia Le believes that there are challenges and opportunities in the external environment for RMB and next we should promote the opening up of the RMB bond market. Following Xia Le’s speech, Sun Lujun shared his views on the several “asymmetry” issues emerging in the RMB internationalization, the supporting measures and order of financial reform, and the fundamental driving force of RMB internationalization. Other guests also raised questions on RMB currency swaps and the offshore derivatives market and Xia Le share his views about them.

DOWNLOAD