RMB: Wider use ex­pected, pro­pelled by more open­ing-up

China Daily (Canada) - - TOP NEWS -

Mei Dongzhou, an as­so­ciate pro­fes­sor at the Cen­tral Uni­ver­sity of Fi­nance and Eco­nom­ics, re­garded the in­clu­sion of the yuan into the Spe­cial Draw­ing Right cur­rency bas­ket as a ma­jor rea­son for its greater role in global re­serves. The in­clu­sion has in­duced au­to­matic yuan al­lo­ca­tion in of­fi­cial re­serves and buoyed world­wide ac­cep­tance of the cur­rency, he said.

Oct 1 marked the sec­ond an­niver­sary of the yuan be­ing in­cluded in the SDR — a re­serve cur­rency built from a bas­ket of im­por­tant na­tional cur­ren­cies as­signed by the IMF — with a weight of 10.92 per­cent.

A re­cent re­port from Gold­man Sachs Group es­ti­mated the ren­minbi’s share in global re­serves “should rise to around 3 to 4 per­cent by the end of 2022”.

Ful­fill­ment of yuan in­ter­na­tion­al­iza­tion’s great po­ten­tial will rely on progress in the open­ing-up of China’s fi­nan­cial mar­kets and the de­vel­op­ment of fi­nan­cial mar­kets’ depth and breadth, which dic­tates the at­trac­tive­ness of ren­minbi as­sets, Mei said.

Fang Xing­hai, vice-chair­man of the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion, told re­porters in Septem­ber that the coun­try will keep im­prov­ing both the con­ve­nience of for­eign cap­i­tal in­vest­ing in China and fun­da­men­tal mar­ket rules, in­clud­ing trad­ing sus­pen­sion, in­for­ma­tion dis­clo­sure and trade set­tle­ment.

Mei warned about the risk as­so­ci­ated with fur­ther ren­minbi in­ter­na­tion­al­iza­tion, given the po­ten­tial pres­sure on the safety of cross-bor­der cap­i­tal flows.

Con­tact the writ­ers at zhoulanxv@chi­nadaily.com.cn

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