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The path to currency internationalization: Insights from the Chinese renminbi

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  • Son, Minkyu

Abstract

What matters for a currency to gain an international status? To explore this question, we examine the evolving role of the Chinese renminbi (RMB) in trade invoicing over 2003–2021 and the factors contributing to its heterogeneity using detailed trade data for Korea, China’s largest trading partner. China’s policy reform in 2009, permitting cross-border RMB settlement, boosted RMB invoicing in Korean exports particularly to China, but the US dollar’s existing dominance in trade with China impeded the expansion of RMB. Our study also finds that opening a direct FX market for RMB in 2014 further stimulated RMB usage in exports to non-Chinese destinations. This effect was more pronounced in destination countries with close trade ties or currency swap lines with China, and in exporting industries using more RMB-denominated inputs. These findings highlight the complementarity between a country’s economic fundamentals and government policies in internationalizing its currency.

Suggested Citation

  • Son, Minkyu, 2026. "The path to currency internationalization: Insights from the Chinese renminbi," Journal of International Money and Finance, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:jimfin:v:160:y:2026:i:c:s0261560625001846
    DOI: 10.1016/j.jimonfin.2025.103449
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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