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RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia
Author(s) -
Park Yung Chul
Publication year - 2010
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2010.01186.x
Subject(s) - renminbi , china , east asia , currency , internationalization , mainland china , business , scope (computer science) , international economics , exchange rate , financial integration , economics , liberalization , international trade , finance , financial market , financial system , market economy , monetary economics , political science , law , computer science , programming language
This paper emphasizes the importance of the denomination of financial assets rather than trade invoicing as a long‐term determinant of an international currency. China needs to liberalize and open its financial system and make the RMB fully convertible, and to adopt a more flexible exchange rate system to speed up its currency internationalization, for which China could follow either a global or regional approach. The global approach is a riskier and more unpredictable strategy because it would demand a scope and timeframe of financial liberalization that is likely to be beyond China's institutional capacity over the coming decade. There are two options that could be taken in following the regional approach. One is creating an ASEAN+New 3 (the Chinese Mainland, Hong Kong, and Taiwan) RMB bloc and the other is liberalizing China's financial industries and internationalizing the RMB by playing a leading role in East Asia's economic integration within the framework of ASEAN+3. This paper concludes that the latter is a more realistic and effective approach for China.