Grasp The Internationalization Of RMB And The Opening Rhythm Of Capital Account

After the financial crisis, the internationalization of RMB has become a major topic of domestic financial reform. Under the strategic requirements of comprehensively deepening reform and building a new open economic system in the third Plenary Session of the 18th CPC Central Committee, the financial authorities put forward the steady internationalization of RMB on different occasions. RMB internationalization is a major support for improving the financial market system, building an open economic new system and complying with the trend of multipolarization in the international monetary system.

　　 RMB Internationalization It's a gradual process.

The internationalization of sovereign money means the sovereign currency of an economy has been widely recognized and accepted by the international community, and has played the function of valuation unit, exchange medium and value reserve. Reviewing the development of the international financial system and the formation process of the main international currencies, there are three kinds of models for the internationalization of sovereign money: the first mode is to realize the internationalization of the currency through the institutional arrangement of the international monetary system; the second mode is to achieve currency internationalization through the arrangement of regional monetary system; the third mode is to promote currency internationalization through the development of real economy and financial deepening.

According to the three models of the internationalization of sovereign money, because of the lack of international monetary system arrangement and regional monetary cooperation mechanism, the more realistic way of RMB internationalization is endogenous monetary internationalization mode. The mode of endogenous currency internationalization is basically a natural historical process. It generally matches the process of economic development, financial deepening and opening to the outside world, and is coordinated with current account, capital account and financial system opening. If a radical propulsion mode is adopted, it may be counter productive. In a sense, the internationalization of RMB is a gradual process.

In the past few years, the internationalization of RMB has achieved initial results. First, the proportion of cross-border RMB trade settlement continues to improve, and the settlement function is constantly strengthened. In 2014, the scale of RMB settlement reached 6 trillion and 650 billion yuan, an increase of 41% over the same period last year, accounting for 24.5% of the total trade volume from 25.2% in 2013. Two, RMB valuation function began to exert force, RMB assets diversified development, offshore RMB offshore market developed vigorously, and RMB investment currency function began to appear. The three is the degree of official acceptance of RMB. The currency swap agreement triggers the basic function of RMB reserve currency. Foreign currency authorities have nearly 20 economies in foreign exchange reserve assets. Since December 2008, the Central Bank of China has signed a currency swap agreement with a total of nearly 3 trillion yuan with 28 central banks.

However, there are many problems in the process of RMB internationalization. First, there is a "lame" structure in the cross-border trade settlement of RMB, which has a certain "false prosperity" in terms of scale and growth rate. The RMB trade settlement 80%-90% is the import trade settlement, rather than the exporter's more favorable export trade settlement. Two, the function of investment currency is still very preliminary. The RMB has not played an important role in the international asset market. By the middle of 2014, the total value of RMB assets was only US $250 billion, about 0.1% of the global market, which is similar to that of Peru new sol and Philippines pesos. Three, the proportion of RMB in official reserves is low, and the currency swap agreement does not really reflect the function of RMB reserve currency.

More importantly, the internationalization of the renminbi is constrained by capital account liberalization. Handling the relationship with capital account liberalization is the first priority of RMB internationalization. If the capital account is opened to promote the internationalization of RMB, it is a dangerous act that puts the cart before the horse, gains more than gains, and lacks the overall view. RMB can not be freely convertible, capital account is not fully open, making RMB capital two-way flow, two-way opening of capital market, and RMB capital pool and asset pool expansion are facing institutional bottlenecks. It is difficult to promote the internationalization of RMB quickly and effectively. RMB The biggest constraint of internationalization is the opening of capital account. However, at present, it is not appropriate to co-ordinate the capital account in an overall and rapid way.

　　 Offshore market It's the bridgehead.

RMB offshore market is the bridgehead of RMB internationalization. In line with the opening of capital account, we should vigorously develop the offshore RMB market and steadily push forward the internationalization of RMB. This is the most important breakthrough for RMB internationalization under the constraint of capital account liberalization. The development of offshore RMB market helps to deepen cross-border RMB trade settlement and foreign direct investment mechanism construction. Once the offshore RMB market is highly developed, overseas importers will be willing to hold renminbi, and export trade settlement will develop. Through the policy guidance and the market mechanism to expand the RMB settlement ratio of export links, and gradually expand the norms and scope of RMB outward direct investment, it will further play the function of RMB settlement and investment. The development of offshore RMB market helps to consolidate the foundation of RMB's investment in monetary function. The development of "dim sum debt" (Hongkong), "Lion City bonds" (Singapore), and "treasure island debt" and other international bond markets will expand the offshore assets RMB pool, and form an interactive pattern with the bond market, financial bonds, corporate bonds and other domestic bond markets. The breadth of RMB assets market will continue to expand, and the depth will be deepened. This will gradually form the investment function of RMB. The development of offshore RMB market helps to promote the use of RMB in trade, investment and capital exchanges in the surrounding areas, and even be held by the monetary authorities of the neighboring countries to further stimulate the reserve function. At the same time, the RMB periphery has a better foundation. Peripheralization is the key and breakthrough of RMB internationalization.