The trajectory of the Renminbi’s internationalisation will depend on several broad factors such as the pace and extent of further reforms in China’s economy, financial market and regulations, and the strength of global demand to use and hold the Renminbi.
The inclusion of Renminbi in the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) basket will trigger an increase on the Renminbi’s share of global reserves. The “One Belt, One Road” initiative and the Asian Infrastructure Investment Bank (AIIB), will enhance the Renminbi’s role as a funding and lending currency.
Meanwhile, regulators have been responsive in their attempts to internationalise the Renminbi. In cultivating the offshore Renminbi market, permitting and encouraging trade settlement using the currency received positive feedback from the market. The recent establishment of Cross-Border Interbank Payment System (CIPS) also gave more confidence in opening up China’s capital accounts. Continued financial liberalisation is one reason why the Renminbi should be increasingly used in trade and investment.
As China’s economy move to a more matured stage, the recalibration of policies is a necessary step. Gradual and careful planning as well as clear communication is critical in ensuring a successful transformation.
RenminbiWorld is the most important annual meeting of players from around the world who are keen to reap the benefits of their exposure to China and its role in driving the global economy. The conference will bring together international players and senior Chinese officials in frank and practical dialogues on the opportunities arising from current policies.