Capital Account Liberalization and the Role of the Renminbi
AbstractDespite an erosion of consensus on its benefits, capital account convertibility remains a long-term goal of China. This paper identifies three major preconditions for convertibility in China: a strong domestic banking system, relatively developed domestic financial markets, and an equilibrium exchange rate. The authors examine each of these in turn and find that, in significant respects, China does not yet meet any of the conditions necessary for convertibility. They then evaluate China’s progress to date on capital account liberalization, including recent efforts to promote renminbi internationalization and greater use of the renminbi in trade settlement. The paper concludes with an overview of remaining obstacles to convertibility and policy recommendations.
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Bibliographic InfoPaper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP11-6.
Date of creation: Feb 2011
Date of revision:
China; renminbi; capital account;
Find related papers by JEL classification:
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-26 (All new papers)
- NEP-IFN-2011-02-26 (International Finance)
- NEP-MON-2011-02-26 (Monetary Economics)
- NEP-OPM-2011-02-26 (Open Economy Macroeconomics)
- NEP-TRA-2011-02-26 (Transition Economics)
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- Meixing Dai, 2011.
"Motivations and strategies for a real revaluation of the Yuan,"
Working Papers of BETA
2011-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Dai, Meixing, 2011. "Motivations and strategies for a real revaluation of the Yuan," MPRA Paper 30440, University Library of Munich, Germany.
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