The Internationalisation of the Renminbi (RMB): A Strategy of Crossing the River by Feeling the Stones

In Estudios, Sistema político by PSTBS12378sxedeOPCH

The principal aim of this paper is to provide a summary of how far has China gone in internationalising its currency, the Renminbi (RMB), to identify the main strategic goals that China wants to achieve through this process and finally to point to the main risks that this objective entails. One can say that so far the internationalisation process has been quite successful. The Chinese approach of crossing the river by feeling the stones has proven adequate. While it is commonly believed that a currency can Orly become international when it is fully convertible, Hong Kong and the RMB might prove the contrary. It is perfectly feasible, at least for a while, to see the hongbi increase its international trade invoicing share without Beijing having to relax its capital controls for mainland China. Nonetheless, there are several risks that lie ahead. So far the internationalisation process has developed smoothly because the waters of the river were relatively shallow, but once the waters deepen proportionally to the amount of RMBs that are in circulation overseas, the journey might be less tranquil.