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Offshore RMB markets in Europe: prospects for greater financial integration between Europe and China

Author

Listed:
  • Daniela Marconi

    (Bank of Italy)

  • Lorenzo Bencivelli

    (Bank of Italy)

  • Anna Marra

    (Bank of Italy)

  • Alessandro Schiavone

    (Bank of Italy)

  • Raffaele Tartaglia-Polcini

    (Bank of Italy)

Abstract

China�s financial integration with the rest of the world lags far behind its trade integration, owing to long-standing capital controls and underdeveloped capital markets. Since 2009 Chinese policymakers have actively promoted the internationalization of the renminbi (RMB) and its use abroad, leading to gradual but greater capital account liberalization. This paper offers an overview of recent developments in the process of RMB internationalization. Offshore RMB markets are playing an important role in stimulating China�s financial integration and promoting the use of the RMB outside the country. In Europe, as elsewhere, offshore RMB centers are flourishing in response to increased demand for RMB-denominated financial services and strong political support from both sides. These developments have implications for currency trading, trade financing and banking activity in general, and strengthen the financial links between Europe and China. Capital account opening in China is expected to remain gradual. Recent episodes of instability on the Chinese financial and exchange rate markets have shown that the road to liberalization may be bumpy and international spillovers large.

Suggested Citation

  • Daniela Marconi & Lorenzo Bencivelli & Anna Marra & Alessandro Schiavone & Raffaele Tartaglia-Polcini, 2016. "Offshore RMB markets in Europe: prospects for greater financial integration between Europe and China," Questioni di Economia e Finanza (Occasional Papers) 334, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_334_16
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2016-0334/QEF_334_16.pdf
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    References listed on IDEAS

    as
    1. Menzie Chinn & Jeffrey A. Frankel, 2007. "Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 283-338, National Bureau of Economic Research, Inc.
    2. Daniela Marconi, "undated". "Currency Co-Movements In Asia-Pacific: The Regional Role Of The Renminbi," GRU Working Paper Series GRU_2016_023, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    3. Yin-Wong Cheung, 2014. "The Role of Offshore Financial Centers in the Process of Renminbi Internationalization," Macroeconomics Working Papers 24049, East Asian Bureau of Economic Research.
    4. Barry Eichengreen, 2013. "ADB Distinguished Lecture Renminbi Internationalization: Tempest in a Teapot?," Asian Development Review, MIT Press, vol. 30(1), pages 148-164, March.
    5. Ito, Hiro & Chinn, Menzie, 2014. "The Rise of the “Redback” and the People’s Republic of China’s Capital Account Liberalization: An Empirical Analysis of the Determinants of Invoicing Currencies," ADBI Working Papers 473, Asian Development Bank Institute.
    6. Riccardo Cristadoro & Daniela Marconi, 2012. "Household savings in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(3), pages 275-299, November.
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    Cited by:

    1. Daniela Marconi, "undated". "Currency Co-Movements In Asia-Pacific: The Regional Role Of The Renminbi," GRU Working Paper Series GRU_2016_023, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    2. Daniela Marconi, "undated". "Currency Co-Movements In Asia-Pacific: The Regional Role Of The Renminbi," GRU Working Paper Series GRU_2016_023, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    3. repec:zbw:bofitp:2017_010 is not listed on IDEAS

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    More about this item

    Keywords

    Renminbi internationalization; renminbi offshore markets;

    JEL classification:

    • F3 - International Economics - - International Finance
    • G1 - Financial Economics - - General Financial Markets

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