IDEAS home Printed from https://ideas.repec.org/p/eab/macroe/23960.html
   My bibliography  Save this paper

Will History Repeat Itself? Lessons for the Yuan

Author

Listed:
  • Benjamin J. Cohen

    (Asian Development Bank Institute (ADBI))

Abstract

For many observers, internationalization is the yuan’s manifest destiny—an irresistible by-product of the remarkable economic success of the People’s Republic of China (PRC). But is such confidence warranted? Recent history has seen the emergence of other currencies that were also expected, at least for a while, to attain wide, growing cross-border use. These included the deutsche mark (DM), the Japanese yen, and the euro (successor to the DM). Yet in the end their internationalization reached an upper limit, short of expectations. Will history repeat itself? Or will the yuan prove exceptional, the currency that finally managed to keep ascending where others faltered? The aim of this paper is to see what lessons may be drawn from these earlier experiences for the anticipated internationalization of the yuan. Much can be learned from their stories—first, about what may drive the internationalization of a currency, and second, about what may ultimately set a limit to the process. The main message of the analysis is that the challenge of internationalization is formidable, involving demanding conditions. Can Beijing sustain its record of price stability and effective policy management? Can the country succeed in shifting its industrial and trade structure toward exports of more advanced differentiated products? Can the yuan’s convertibility be broadened? Can domestic financial markets be adequately developed? Can the country’s political institutions be trusted? Can geopolitical tensions be avoided? Contrary to predictions of the yuan’s “inevitable†rise, success in all these respects is by no means guaranteed.

Suggested Citation

  • Benjamin J. Cohen, 2014. "Will History Repeat Itself? Lessons for the Yuan," Macroeconomics Working Papers 23960, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:macroe:23960
    as

    Download full text from publisher

    File URL: http://www.eaber.org/node/23960
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bénassy-Quéré, Agnès & Forouheshfar, Yeganeh, 2015. "The impact of yuan internationalization on the stability of the international monetary system," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 115-135.

    More about this item

    Keywords

    Internationalization of yuan; China; PRC; internationalization of a currency;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:macroe:23960. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shiro Armstrong (email available below). General contact details of provider: https://edirc.repec.org/data/eaberau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.