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Cao Yuanzheng: The Belt and Road construction will become the new opportunity for the internationalization of RMB
Cao Yuanzheng, chief economist at the Bank of China, said on May 12th at the eighth rich country forum that the internationalization of the RMB was not only a will of China, but also an international demand. In its view, "The Belt and Road" strategy and the internationalization of the RMB complement each other, "The Belt and Road construction will further stimulate foreign demand for the renminbi, RMB internationalization become an opportunity.
In Cao Yuanzheng's view, with the development of the The Belt and Road ", build a lot of infrastructure in Asia, a large number of investment flows to Asia, natural opportunities for the internationalization of rmb.
Talk about the internationalization of the RMB meaning, Cao Yuanzheng said that the RMB is Chinese sovereign currency, RMB internationalization is the internationalization of currency, the RMB began to enter the process of balance sheet, including the government, enterprises, financial institutions and households, etc..
It is reported that the international monetary needs to undertake 3 functions: the first is international trade pricing and settlement tools; second is the position due to pricing and settlement, investment and financing arrangements for positions become tools; third is due to the above two, make it become the general means of payment, which bear the value function, so as to become a reserve currency.
Cao Yuanzheng said, now look, the RMB is gradually assume the functions of the above-mentioned international currency, especially after the RMB formally joined the SDR, has now presented a full functional outline.
In fact, the renminbi has become an international payment currency, and the demand for Renminbi assets by foreign institutions has been growing rapidly. In the past, Cao Yuanzheng said, the internationalisation of the renminbi was very rapid, much more than he had made a few years ago. This means that internationalization of the RMB is not only China's will, but also international demand. In addition, the RMB internationalization of the special route has also promoted China's economic reform, the reform in terms of Shanghai, that is reflected in the start of the Shanghai free trade zone.
In accordance with international experience, the international currency generally has 3 conditions: first, the total convertibility of sovereign money. Although convertible currencies do not necessarily become international currencies, international currencies must be convertible currencies. Second, the balance of payments deficit. The balance of payments deficit is a prerequisite for meeting the sovereign wealth of the non resident balance sheet. Although there is no need for a comprehensive deficit in the balance of payments, there is a long-term deficit, either under capital or under at least one item under the current account. Third, the depth of financial markets: once the sovereign currency as an international currency, means that the country's monetary policy is also the international monetary policy, responsible for the provision of international liquidity obligations, which requires the state of perfect financial system and financial market and financial infrastructure.
Cao Yuanzheng believes that, obviously, the current international use of the RMB does not fully meet the above conditions, it constitutes a challenge to China's current financial system. In order to meet international demand, special arrangements are needed at this particular stage. The internationalization of the RMB is different from the traditional route.
In addition, Cao Yuanzheng believes that China's foreign trade has maintained a high growth rate, the internationalization of the RMB should be deepened. The internationalization of the RMB "in trade" but "more than trade", this is because with the opening of cross-border RMB settlement, because trade in accumulated overseas RMB positions if there is no good investment channels, will weaken the power of RMB use. If the international use of the RMB can not be deepened, the scope of the RMB for international trade will be difficult to expand, so the international use of the renminbi is more than trade".