On the afternoon of November 25th, the No. 21st Tao Xiang International Finance Lectures was successfully held at Renmin University of China (RUC). Dr. He Xiaobo, senior trader of Bank of China Offshore RMB Trading Center, was invited to give a lecture on “Development of the Offshore RMB Market”. The lecture was chaired by He Qing, deputy director of the Department of Money and Banking of the School of Finance at RUC, and had Qian Zongxin, deputy secretary of CPC, School of Finance, RUC, as the guest discussant.

Mr. He Xiaobo first introduced the international experience of offshore market development, expounding the premise of a country’s offshore market development and the essential features of the offshore market. He pointed out that the prerequisite for the development of the offshore market is the improvement of the country’s economic strength and the maturity and development of the onshore financial market. He believes that the offshore market has the following important features: 1. The offshore market is an crucial transition in the process of currency internationalization. 2. Building an effective firewall is the key to developing the offshore market. 3. The Offshore Financial Center is the vital support for the development of the offshore market. Next, Mr. He Xiaobo introduced the current policy trends and regulatory methods of the offshore RMB market, and elaborated on the firewall system and policy details of the offshore RMB market and the onshore market.

Then, Mr. He Xiaobo introduced the development status of the offshore RMB market. First, he introduced the status quo of offshore RMB deposits, told the development history of the Hong Kong-centered offshore market, and particularly emphasized on the important influence the 811 exchange rate reform had on the development of the RMB market. He also introduced the RMB account system, the offshore RMB product system and the offshore RMB currency market, as well as the development of the offshore bond market and the foreign exchange market.

Finally, Mr. He Xiaobo expressed his outlook for the development of the offshore RMB market. He believes that all the factors including the upward trend of China’s economy, China’s continued trade surplus, and stable foreign exchange reserves (3 trillion bottom line) will support the steady progress of RMB internationalization. With his work experience and theoretical knowledge, he introduced the impossible triangle of RMB internationalization, foreign exchange reserve stability, and exchange rate stability. He believes that in the future we will choose a policy combination of “capital account opening plus foreign exchange reserve stability”.

Deputy secretary Qian Zongxin made a summary and appraisal of Mr. He Xiaobo’s lecture, and discussed with Mr. He about the business features of Hong Kong’s financial market and its difference and connection with the market in mainland China.

During the Q&A session, Dr. He Xiaobo answered the questions raised by the students on the dramatic fluctuations in the offshore market’s overnight lending rate and the impact of RCEP on the process of RMB internationalization.