RMB Cross-Border Settlement Into The "Fast Lane"

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< p > in early July, the Central Bank of Korea and China signed an agreement to designate Bank of communications as clearing bank for RMB business in Seoul, South Korea. < /p >
Less than p months ago, the people's Bank of China (hereinafter referred to as the central bank) authorized the Bank of China Frankfurt branch to act as the clearing bank for Frankfurt's RMB business, and China Construction Bank acted as the clearing bank of the RMB business in London. < /p >
Less than P, a year ago, in February 8, 2013, the central bank appointed ICBC Singapore to act as a local RMB clearing bank. This is the first time that the central bank has chosen RMB clearing banks abroad. < /p >
< p > recent good news about RMB internationalization is coming. Not long ago, the French central bank governor Noah had publicly stated that French companies would directly trade with China in the euro and Yuan and stop using the US dollar. France is not the only country to consider settlement in Renminbi. Because of the fear that the US and Europe will impose sanctions on Russia and even drive them out of the US dollar market, more and more Russian enterprises are turning to Renminbi or other Asian currencies to sign commercial agreements. Judging from the amount of renminbi settlement, Paris ranks fourth in the world, after Singapore, China, Taiwan and London. < /p >
< p > < strong > trend < /strong > < /p >
< p > April 8, 2009, after the State Council decided to carry out cross-border trade RMB settlement pilot in Shanghai and Guangzhou, Shenzhen, Zhuhai, Dongguan and other cities. In July of the same year, China's cross-border trade RMB settlement pilot business successfully completed the first transaction in Shanghai. < /p >
< p > data show that when initial cross-border trade RMB settlement pilot was launched, the settlement amount was only 3 billion 600 million yuan. According to figures released by the central bank in June this year, China's banks accumulated 4 trillion and 600 billion yuan in cross-border RMB settlement business in 2013. < /p >
During the period of < p > 5, although RMB accounts for a relatively small proportion of settlement currency, the internationalization of RMB has taken an important step. "China is the world's largest trading body, and clearing trade with China can reduce the risk of exchange rate." Cao Yuanzheng, chief economist at BOC International Holdings, told Global Entrepreneur. < /p >
P > Chinese enterprises are pricing Renminbi in the export and settlement of goods, which can avoid exchange rate risk and reduce the cost of international trade. But in the current international monetary system, trade settlement is usually settled in US dollars or other international currencies. < /p >
The path of internationalization of RMB P is basically the same as that of Mark, Germany in 1970s. In 1973, because of the collapse of the "Bretton Woods system" of the US dollar (referring to the international monetary system centered on the US dollar after World War II), Mark and Japanese yen only had the chance to become international currencies. < /p >
< p > July 1944, the United States invited the representatives of the 44 governments preparing to build the United Nations to meet in Bretton Woods, and the parties signed the Bretton Woods Agreement. The Bretton Woods system is actually an international gold exchange standard system, also known as the dollar gold standard system. It made the US dollar at the center of the postwar international monetary system, and the dollar became the "equivalent" of gold. The United States assumed the obligation to exchange gold at official prices, and the currencies of all countries could only be linked to gold through the US dollar. The US dollar was in the central position and played the role of world currency. Since then, the US dollar has become the means of payment for international liquidation and the main reserve currencies of various countries. < /p >
< p > at present, France and Russia are the strongest countries in cross-border settlement of RMB, especially in Russia. The Ukraine crisis has led the us to impose financial sanctions on Russia, which has great influence on Russia. "China is one of Russia's largest trading partners, but the actual trade share is still small. At present, Russia's 70% to 80% foreign trade is generated between Europe and the United States." Zhao Qingming, chief researcher of Beijing Financial Derivatives Research Institute, told Global Entrepreneur. < /p >
< p > the international market is not enthusiastic about the cross-border settlement of RMB, because the lack of reflux channels, investment channels and the different interest rates and exchange rates between China and abroad. According to the RMB global index launched by standard chartered at the end of 2012, the stock of Hongkong has nearly 950 billion as of the end of March this year, accounting for 13% of the total local bank deposits. Hongkong is the largest settlement center of the renminbi. < /p >
< p > June 2014, the central bank issued guidance on implementing the opinions of the general office of the State Council on supporting the steady growth of foreign trade, supporting the cross-border settlement of RMB. < /p >
< p > in Cao Yuanzheng's view, there must be three points for the RMB to become a truly meaningful international currency. First of all, to become an international currency, it must be convertible currency, but the RMB is not completely convertible currency; secondly, it is necessary to maintain the balance of payments beforehand, so that the currency can be widely used internationally. Third, if RMB wants to become an international currency, the central bank's monetary policy needs to be internationalized. < /p >
< p > internationalized < a href= > http://www.91se91.com/news/index_cj.asp > currency > /a > policy must be established in a sound financial market, but at present China's financial and capital markets are not perfect. "Under such circumstances, the internationalization of RMB can only take a special route, that is, the mode of clearing banks and offshore markets." Cao Yuanzheng said. The real international currency is neither offshore nor clearing bank. Therefore, the internationalization of RMB depends on the full convertibility of RMB. Zhao Qingming agreed that "to become an international currency, the renminbi needs investment function." The investment function depends on the development of the national financial market, but the bright spot of investment in China's financial market is not enough. < /p >
"P >" from the overseas market, investment institutions demand for RMB is exuberant. Multinational enterprises and foreign residents have this demand. " Guo Tianyong, director of the banking research center of Central University of Finance and Economics, told Global Entrepreneur. < /p >
At present, China's cross-border settlement business is mainly carried out among foreign subsidiaries of Chinese financial institutions. P In Cao Yuanzheng's view, it is the result of the opening of domestic capital account that Chinese banks carry out settlement business overseas. If the capital account is open and the RMB flows freely, offshore markets and liquidation businesses will gradually disappear. < /p >
< p > < strong > challenge > /strong > /p >
< p > the internationalization of any currency is a reflection of the strength of its own country. "The degree of internationalization of currency depends directly on the comprehensive national strength of currency countries, which requires that the country is in the leading position internationally in terms of politics, economy and military affairs." Zhao Qingming said. < /p >
P, before World War II, the pound was the world's largest international currency. Then Britain was the world's strongest. After World War II, the United States became the world's superpower, and the dollar replaced the pound as the number one international currency. Statistics show that at the end of the Second World War, gold in the United States accounted for more than 75% of the total official gold reserves of the world at that time. Almost all the gold in the world came to the United States through war. As the main currency of the European Union, the euro is second only to the US dollar. < /p >
< p > Zhao Qingming believes that the strength of a country is not only because its size is strong, but its scale is only a support. The key lies in its own economic strength. "Japanese TV, cars and electronic products almost covered the global market in those days, and the yen was in a strong position in international trade and international investment." < /p >
At present, the circulation of RMB in the world relies mainly on export trade. < p > Because our country is strict in supervising the financial market, some foreign capital gains the appreciation income through the overseas RMB market investment. But the RMB needs two-way floating and relatively stable exchange rate trend. The unilateral reserve of RMB outside China is meaningless. Therefore, only if RMB gets the dominant position in the three international monetary systems of world trade, global investment and international reserve, can internationalization be truly realized. < /p >
"P", "the internationalization of RMB, the challenge to China's monetary policy is greater than the possible benefits. What does the opening of capital account mean? What does the deficit mean? These are major problems that need to be solved. Cao Yuanzheng said. < /p >
P > although the RMB has accelerated the process of cross-border settlement, the renminbi is not the universal currency of the world, nor is it an international investment currency. "To become an international currency depends on when China will become a superpower. It will take a long time." Zhao Qingming said. < /p >
From 1940 to 1945 after the Second World War, Britain's comprehensive strength has been surpassed by the United States, but Britain is not reconciled to it. The pound still occupies a strong market leading position. P "As a latecomer, if he wants to join the ranks of international currencies, he will not easily surrender his monetary position." Zhao Qingming said that the renminbi is far from this stage, and it is too early to talk about threatening the global hegemony of the US dollar. < /p >
< p > Guo Tianyong believes that the biggest challenge for RMB to become an international currency is not in the foreign market, but in its own reform. There are still controls on the renminbi, which requires further economic reform. The financial market will be perfected without guaranteeing its own economy. < /p >
"P", "the future strong renminbi will not be able to take the place of the US dollar." It is problematic to expose the single currency system in the US dollar centered international monetary system. The single currency will bring systemic risk, so the trend of global currency diversification will emerge, which will also bring new opportunities for RMB internationalization. Cao Yuanzheng said. < /p >
Cao Yuanzheng P's view of the US dollar's single hegemony is also verified by Jim Rogers, a famous international investor and finance professor. As early as in 2008, Rodgers once said that in the past 200 years, elected politicians in the United States had brought the US $10 trillion in treasury bonds. A large number of US dollars are printed on the US dollar, and the US dollar has been depreciated continuously due to the excessive issuance of banknotes. < /p >
< p > in Cao Yuanzheng's view, < a href= "http://www.91se91.com/news/index_s.asp" > RMB < /a > the future development can not be single currency but should belong to one yuan in the multi currency system. "The size of the renminbi in the future depends on the comprehensive strength, including the economy, the share of the international trade, the central bank policy and so on." < /p >