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The internationalisation of the RMB: New starts, jumps and tipping points

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  • Batten, Jonathan A.
  • Szilagyi, Peter G.

Abstract

We investigate the process of currency internationalisation of the Chinese Renminbi (RMB). Aggregated cross-border data provided by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) allows better measurement of the role played by a currency in trade and settlement. RMB transactions are significant and increasing but remain concentrated in key financial centres. Analysis using an asset pricing framework shows that the footprint of Chinese corporations in international markets has at times been significant, with the size of these transactions prompting many to reassess the likely pace of RMB internationalisation and its usage as an alternate vehicle currency.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ememar:v:28:y:2016:i:c:p:221-238
    DOI: 10.1016/j.ememar.2016.02.006
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    2. Liu, Tao & Wang, Xiaosong, 2016. "The Road to International Currency: Global Perspective and Chinese Experience," MPRA Paper 72877, University Library of Munich, Germany.
    3. Yi-Chen Chung & Hsien-Ming Chou & Chih-Neng Hung & Chihli Hung, 2021. "Using Textual and Economic Features to Predict the RMB Exchange Rate," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(6), pages 1-8.
    4. Georgiadis, Georgios & Le Mezo, Helena & Mehl, Arnaud & Tille, Cédric, 2021. "Fundamentals vs. policies: can the US dollar’s dominance in global trade be dented?," Working Paper Series 2574, European Central Bank.
    5. Zhang, Chen & Fang, Ying & Niu, Linlin, 2022. "Changing anchor of the renminbi: A Bayesian learning approach to the decade-long transition," Economic Modelling, Elsevier, vol. 116(C).
    6. Liu, Tao & Wang, Xiaosong & Woo, Wing Thye, 2022. "The rise of Renminbi in Asia: Evidence from Network Analysis and SWIFT dataset," Journal of Asian Economics, Elsevier, vol. 78(C).
    7. Yu, Ziliang & Liu, Xiaomeng & Liu, Zhuqing & Li, Yang, 2023. "Central bank swap arrangements and exchange rate volatility: Evidence from China," Emerging Markets Review, Elsevier, vol. 56(C).
    8. Thomas C. Chiang & Yuanqing Zhang, 2018. "An Empirical Investigation of Risk-Return Relations in Chinese Equity Markets: Evidence from Aggregate and Sectoral Data," IJFS, MDPI, vol. 6(2), pages 1-22, March.
    9. Cheng, Lian & Luo, Junru & Liu, Lin, 2018. "Is Renminbi a (Truly) International Currency? An Evaluation Based on Offshore Foreign Exchange Market Trading Patterns," MPRA Paper 89279, University Library of Munich, Germany.
    10. Liu, Tao & Wang, Xiaosong & Woo, Wing Thye, 2019. "The road to currency internationalization: Global perspectives and chinese experience," Emerging Markets Review, Elsevier, vol. 38(C), pages 73-101.
    11. Yin-Wong CheungAuthor-Workplace-Name: City University of Hong Kong & Matthew S. Yiu, 2016. "Offshore Renminbi Trading: Findings from the 2013 BIS Triennial Central Bank Survey," Working Papers 142016, Hong Kong Institute for Monetary Research.
    12. Hailong Jin & Wisdom Takumah & Josiah Jorenby, 2018. "Currency Internationalization and the International Price System," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(4), pages 303-309, November.
    13. Liu, Tao & Lu, Dong & Woo, Wing Thye, 2019. "Trade, finance and international currency," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 374-413.
    14. Kunze, Frederik & Basse, Tobias & Wegener, Christoph & Spiwoks, Markus, 2018. "The emergence of the RMB: A "New Normal" for China's exchange rate system?," University of Göttingen Working Papers in Economics 348, University of Goettingen, Department of Economics.

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    More about this item

    Keywords

    Currency Internationalisation; Financial market development; Renminbi; RMB; Society for Worldwide Interbank Financial Telecommunications (SWIFT);
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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