Macro-Finance Salon (No. 48): Why is RMB More and More Important?

2017-01-12 IMI

On January 12, Macro-Finance Salon (No. 48) was held in Renmin University of China. Zhou Yinggang, professor of the School of Economics and deputy dean of the Wang Yanan Institute for Studies in Economics of Xiamen University, delivered a keynote speech on “why is RMB more and more important—based on a network analysis approach”. The meeting was presided over by Prof. Tu Yonghong, deputy director of IMI. Starting from the international background of RMB’s influence, Prof. Zhou pointed out that RMB’s increasing influence could be analyzed from two aspects. First, its weight as a settlement currency is increasing; second, its impact as an investment currency on the global exchange rate market continues to expand. Then he analyzed RMB’s international influence through events like RMB joining the SDR, Brexit, Trump’s election, the Fed increasing interest rate, etc. Although RMB exchange rate has witnessed fluctuations, its international influence is stronger. Based on a network identifying the spillover effect of exchange rate, he created RMB Influence Index. By using statistics and comparing with currencies in seven major developed countries and eight major Asian countries, he proved that RMB’s international influence is stronger. He also analyzed onshore RMB’s Influence Index and exchange rate, imports and exports, and foreign investment, and concluded that those data could explain why RMB’s international influence is increasing although its exchange rate is dropping. During the discussion, Prof. Tu Yonghong, Prof. He Qing, Prof. Di Dongsheng, Prof. Qian Zongxin, and Prof. Wang Fang raised questions about RMB’s Influence Model. For example, is it reasonable to use a USD index? And how to show the relevance between other currencies and USD? Prof. Zhou answered the questions one by one. Besides, they also had discussions about the data usage and calculation method of the model.

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Macro-Finance Salon (No. 48): Why is RMB More and More Important?

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