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RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia

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  • Yung Chul Park

Abstract

This paper emphasizes the importance of the denomination of financial assets rather than trade invoicing as a long-term determinant of an international currency. China needs to liberalize and open its financial system and make the RMB fully convertible, and to adopt a more flexible exchange rate system to speed up its currency internationalization, for which China could follow either a global or regional approach. The global approach is a riskier and more unpredictable strategy because it would demand a scope and timeframe of financial liberalization that is likely to be beyond China's institutional capacity over the coming decade. There are two options that could be taken in following the regional approach. One is creating an ASEAN+New 3 (the Chinese Mainland, Hong Kong, and Taiwan) RMB bloc and the other is liberalizing China's financial industries and internationalizing the RMB by playing a leading role in East Asia's economic integration within the framework of ASEAN+3. This paper concludes that the latter is a more realistic and effective approach for China. Copyright (c) 2010 The Author Journal compilation (c) 2010 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Suggested Citation

  • Yung Chul Park, 2010. "RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(2), pages 1-21.
  • Handle: RePEc:bla:chinae:v:18:y:2010:i:2:p:1-21
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    References listed on IDEAS

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    1. Dobson, Wendy & Masson, Paul R., 2009. "Will the renminbi become a world currency?," China Economic Review, Elsevier, vol. 20(1), pages 124-135, March.
    2. Richard N. Cooper, 2009. "The Future of the Dollar," Policy Briefs PB09-21, Peterson Institute for International Economics.
    3. Yung Chul Park, 2007. "Whither Financial and Monetary Integration in East Asia?," Asian Economic Papers, MIT Press, vol. 6(3), pages 95-128, Fall.
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    Cited by:

    1. Benjamin Keddad, 2013. "Exchange rate coordination in Asia under regional currency basket systems," Economics Bulletin, AccessEcon, vol. 33(4), pages 2913-2929.
    2. Dufrénot, Gilles & Keddad, Benjamin, 2014. "Business cycles synchronization in East Asia: A Markov-switching approach," Economic Modelling, Elsevier, vol. 42(C), pages 186-197.
    3. de Truchis, Gilles & Keddad, Benjamin, 2013. "Southeast Asian monetary integration: New evidences from fractional cointegration of real exchange rates," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 394-412.
    4. Dai, Meixing, 2011. "Motivations and strategies for a real revaluation of the Yuan," MPRA Paper 30440, University Library of Munich, Germany.
    5. Chee-Heong Quah & Patrick M. Crowley, 2012. "China and the Dollar: An Optimum Currency Area View," Prague Economic Papers, University of Economics, Prague, vol. 2012(4), pages 391-411.
    6. repec:prg:jnlpep:v:2013:y:2013:i:4:id:431:p:391-411 is not listed on IDEAS
    7. Batten, Jonathan A. & Szilagyi, Peter G., 2016. "The internationalisation of the RMB: New starts, jumps and tipping points," Emerging Markets Review, Elsevier, vol. 28(C), pages 221-238.
    8. Yuming Cui, 2013. "The internationalization of the RMB: where does the RMB currently stand in the process of internationalization," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(2), pages 68-85, November.
    9. repec:mes:emfitr:v:53:y:2017:i:12:p:2845-2857 is not listed on IDEAS
    10. Hyoung-kyu Chey, 2014. "A Demand-Side Analysis of Renminbi Internationalisation: The Renminbi in South Korea," GRIPS Discussion Papers 14-02, National Graduate Institute for Policy Studies.
    11. Lee, Il Houng & Park, Yung Chul, 2014. "Use of National Currencies for Trade Settlement in East Asia: A Proposal," ADBI Working Papers 474, Asian Development Bank Institute.
    12. Keddad, Benjamin, 2016. "How do the Renminbi and other East Asian currencies co-move?," MPRA Paper 83782, University Library of Munich, Germany.
    13. repec:eee:ecofin:v:46:y:2018:i:c:p:168-186 is not listed on IDEAS
    14. repec:eee:jimfin:v:91:y:2019:i:c:p:49-70 is not listed on IDEAS
    15. Benjamin Keddad, 2013. "Assessing Asian Exchange Rates Coordination under Regional Currency Basket System," AMSE Working Papers 1345, Aix-Marseille School of Economics, Marseille, France, revised Sep 2013.
    16. Hyoung-kyu Chey, 2015. "Renminbi in Ordinary Economies: A Demand-side Study of Currency Globalization," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(3), pages 1-21, May.

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