[Edit this paragraph] Trend analysis
The renminbi has always been called the "small dollar". This paper analyzes the current situation of RMB overseas circulation. In the past, RMB only circulated in border areas, but now it has been exchanged in some developed countries. It can be said that the process of China's economic development is the process of RMB circulation expansion. The faster the economic development, the wider the circulation scope and the larger the quantity. The RMB has become another "hard currency" in Southeast Asia, second only to the US dollar, the euro and the Japanese yen. In the southwest frontier, RMB is called "small dollar", which is used as hard currency and has a wide circulation range. The RMB in the three northeastern provinces of Laos can completely replace the local currency and circulate in the territory as far as Vientiane, the capital of Laos. In the Sino-Myanmar border trade and tourism activities, the annual outflow and inflow of RMB in Xiaomengla, an important town of Chanbang in Myanmar, is as high as 6,543.8 billion yuan. The renminbi is also widely circulated in Vietnam and has been circulating all over Vietnam. The National Bank of Vietnam launched the RMB storage business. In northwest China, RMB mainly circulates in five Central Asian countries, Russian and Pakistani. At present, the largest cross-border circulation of RMB is Kazakhstan, with about one billion RMB. The total amount of RMB circulating in other countries in Central Asia is also more than one billion yuan. In the northeast of China, RMB mainly flows to Russia, North Korea and Mongolia. Mongolia, in particular, has taken RMB as its main foreign currency. All banks in Mongolia have carried out RMB deposit business. In the border trade with Mongolia, RMB cash transactions account for 1/3 of the total bilateral transactions. The largest cross-border circulation of RMB is in China Mainland and Hongkong. RMB can be freely exchanged in Hong Kong through various channels. Unlike other neighboring countries and regions, RMB is the reserve currency for Hong Kong's investment. In addition, RMB is widely used in China and Macau. Since the beginning of 2 1 century, RMB has been circulating in some developed countries and regions in the world. The main performance is that RMB has been used in some developed countries and regions. With the increasing number of tourists from China, airports and restaurants in some European countries and the United States, Canada and other countries have launched RMB exchange business. For example, the airport in new york, Chinatown and some Chinese-populated areas. In areas where Japanese Chinese are concentrated, they have also received RMB. The market chose RMB to circulate in neighboring countries, which is the performance of China's economic growth to a new stage. At the same time, it shows that the process of RMB internationalization has begun. The trend of RMB internationalization should first be the result of market choice, not the result of government power. Specifically, the internationalization of a country's currency is first determined by the country's economic fundamentals: a larger economic scale and a sustained growth trend are the economic basis for establishing traders' confidence in this currency; Countries with a high degree of economic openness and an important position in the world economy can obtain traders' demand for their own currencies. The confidence and demand of international traders for this currency determines that this currency will inevitably play an increasingly important role in the world monetary system and eventually become an international currency. According to these conditions, it is the result of market choice to analyze the current trend of RMB internationalization. 1997 after the Asian financial crisis, in order to maintain the international reputation of RMB, the People's Bank of China narrowed the fluctuation range of RMB and formed a relatively stable relationship with the US dollar, which made RMB quickly recognized by neighboring regions and formed the image of "good currency" in this region. At the same time, the strong performance of RMB supported by high-speed and stable economic growth has enhanced the credibility of RMB in the region and won the trust and demand of regional markets. From China's point of view, the formation of China's economic characteristics as a big country and the improvement of internationalization have enhanced the confidence of participants in international economic transactions and the general public in RMB, thus increasing the demand for RMB. If China's economic growth is sustainable, its universal acceptance will be greatly improved, and the RMB will inevitably become an international currency. From the perspective of Asia, with the rise of China, taking a currency as a measure of value in a market will greatly reduce the transaction cost in trade and capital flow, create more trade opportunities for the region, and improve the scale, efficiency and national welfare of transactions. The improvement of economic integration between China and Asia will expand the scale of the Asian market and generate demand for the same value standards. The promotion of the status of RMB will be an inevitable result, and it will be possible for RMB to replace other currencies in Asia.
[Edit this paragraph] Advantages and disadvantages analysis
China is a developing country, and its economic development is especially dependent on financial wealth. Therefore, once the RMB is internationalized, it can not only reduce the wealth loss caused by the use of foreign currency in China, but also open up new channels for the use of funds in China. However, RMB internationalization is a "double-edged sword", and its advantages and disadvantages need to be carefully analyzed. The report of the key project "RMB Regionalization in Internationalization Strategy" of China Academy of Social Sciences points out that its positive influence is mainly reflected in four aspects: enhancing China's international status and enhancing China's influence on the world economy. Dollar, euro, Japanese yen and other currencies can serve as international currencies, which fully embodies the strong economic strength and high international credit status of the United States, the European Union and Japan. After the internationalization of RMB, China will have the right to issue and adjust a world currency, and its influence and voice in global economic activities will also increase. At the same time, the RMB occupies a place in the international monetary system, which can change the current dominant position and reduce the adverse impact of the international monetary system on China. Reduce exchange rate risk and promote the development of international trade and investment in China. The rapid development of foreign trade makes foreign trade enterprises hold a large number of foreign currency creditor's rights and debts. Due to the high risk of currency exposure, exchange rate fluctuations will have a certain impact on the operation of enterprises. After the internationalization of RMB, foreign trade and investment can be denominated and settled in local currency, and the exchange rate risk faced by enterprises will also be reduced, which can further promote the development of China's foreign trade and investment. It will also promote the development of financial markets such as RMB-denominated bonds. Further promote the development of border trade in China. The cross-border flow of RMB cash in the real economy such as border trade and tourism has alleviated the shortage of settlement means in bilateral exchanges to a certain extent, promoted and expanded bilateral economic and trade exchanges, and accelerated the economic development in border minority areas. In addition, many neighboring countries are rich in natural resources and lack of market supply, which is in sharp contrast to the situation in China. The outflow of RMB is conducive to alleviating the shortage of natural resources and the oversupply of the market in China. Earn international seigniorage income. After the internationalization of RMB, the most direct and largest income is the international seigniorage income. Seigniorage refers to the difference between the denomination of paper money issued by the issuer and the cost of paper money issued by virtue of the privilege of issuing currency. Hand out paper money at home, take it from home and use it at home. Issuing world currency is equivalent to collecting seigniorage from other countries, which is basically cost-free. At present, China has a large amount of foreign exchange reserves, which is actually equivalent to a huge amount of free loans to foreign governments, and at the same time it has to bear the inflation tax. After the internationalization of RMB, China can not only reduce the wealth loss caused by the use of foreign exchange, but also gain international seigniorage income, which opens up new channels for China to use funds. At the same time, the report also points out three negative effects: it has a certain impact on China's economic and financial stability. The internationalization of RMB has closely linked China's domestic economy with the world economy, and any trouble in the international financial market will have a certain impact on China's economy and finance. Especially after currency internationalization, if the real exchange rate of local currency deviates from the nominal exchange rate, or the spot exchange rate and interest rate deviate from the expected exchange rate and interest rate, it will give international investors an arbitrage opportunity, stimulate the flow of short-term speculative capital, and may produce a "herd effect" like the Asian financial crisis 1997, which will have a certain impact on China's economic and financial stability. Increase the difficulty of macro-control. After the internationalization of RMB, a certain amount of RMB will circulate in the international financial market, and its international flow may weaken the central bank's ability to control domestic RMB and affect the implementation of domestic macro-control policies. For example, when domestic monetary policy is tightened to control inflation and raise interest rates, the RMB circulating around the world will take the opportunity to increase the supply of RMB, thus weakening the implementation effect of monetary policy. Increase the difficulty of RMB cash management and monitoring. After RMB internationalization, it will be more difficult for the central bank to manage RMB cash, because it is difficult to monitor the demand and circulation of RMB cash abroad. At the same time, the cross-border flow of RMB cash may increase some illegal acts such as smuggling, gambling and drug trafficking. The abnormal cross-border RMB cash flow accompanying these illegal activities will not only affect the stability of China's financial market, but also increase the difficulty of anti-counterfeiting and anti-money laundering. Although the internationalization of a country's currency will bring various negative effects to the country, in the long run, the benefits brought by internationalization are far greater than the costs. The internationalization of US dollar, euro and other currencies shows that having the right to issue international currencies means great economic and political benefits in formulating or amending the rules of international affairs.
[Edit this paragraph] Implementation method
According to the characteristics of China's economy, RMB internationalization can take a two-track and gradual approach. The first track of the dual-track system is to implement gradual convertibility under capital account in China, and at the same time improve the efficiency of China's financial system, including many measures, such as QFII (Qualified Institutional Investor Program) and QDII (Qualified Institutional Investor Program), and various step-by-step capital opening, such as domestic investment in Hong Kong stocks, but this opening is limited and directional. In addition, we can consider inviting overseas high-quality enterprises, such as Apple, IBM and Intel, to issue RMB bonds or stocks in A-shares, so that some RMB can be converted into US dollars and flow out of the country, thus improving China's corporate governance level and the operating efficiency of the capital market. In addition, it is particularly necessary to encourage and promote foreign trade enterprises and overseas trading partners to settle accounts in RMB. Therefore, it is necessary to consider subsidizing RMB exchange rate swap contracts of foreign trade enterprises by the People's Bank of China, that is, providing services for converting future RMB income into foreign currency at a pre-agreed exchange rate at a relatively low price, so as to promote relevant enterprises to settle accounts in RMB. The second track of the dual-track system is overseas, mainly Hong Kong. Hong Kong can greatly expand the scale of the RMB-denominated bond market, promote the RMB-denominated stock market, and make use of the advantages of international financial centers to continuously expand the scale and transaction level of RMB-denominated financial assets, with the aim of forming a RMB financial market overseas as soon as possible to compete with euro securities and US dollar securities. This gradually expanding financial transaction denominated in RMB will greatly promote the internationalization of RMB when conditions are ripe. This measure can also greatly ease the pressure on foreign capital to enter the mainland to bet on the appreciation of the renminbi. For this reason, China banks can consider establishing a RMB foreign exchange trading market in Hong Kong that matches the size of the local capital market. However, the size of this market should be limited. For example, it is stipulated that the participants in the transaction must be participants in the RMB securities market, and the amount of participation in the transaction is limited by the trading quota of its securities market, so as to prevent the market from having a significant impact on the RMB policy. Suggestions on RMB internationalization: First, expand the pilot scope of RMB cross-border trade settlement: in addition to the six basic cities of Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan, the provinces with large border trade will also be included in the pilot scope; 2. Establish and improve the payment and clearing mechanism of cross-border RMB funds, replace cash payment with transfer payment, and provide a clearing platform for RMB pricing and settlement of cross-border trade; Third, China's monetary authorities can sign agreements with the monetary authorities of neighboring countries and regions with large cross-border circulation of RMB, allowing them to exchange RMB into international currencies such as US dollars and euros within a certain amount, so as to enhance the confidence of residents in neighboring countries and regions in RMB; Four, the construction of offshore RMB financial center based in Hong Kong, as a transitional arrangement before the full opening of China's capital projects, in order to eliminate the obstacles of overseas institutions lacking RMB investment and hedging tools.
[Edit this paragraph] Main obstacles
There are still many obstacles on the road of RMB internationalization. At present, the main factors affecting the internationalization of RMB include: insufficient growth of RMB international circulation; The depth and breadth of domestic financial market and the degree of international standardization are insufficient; In the process of internationalization, the external value of RMB may change greatly, which hinders the autonomy of economic policy. Among them, the shortage of RMB international circulation will become the biggest problem. Because in the golden age of the gold standard, although Britain had a huge current account surplus, it exported a lot of pounds to all parts of the world through capital export; After the establishment of the Bretton Woods system, the United States provided dollar liquidity to the world through the current account deficit. Although China has become one of the largest trade surplus countries in the world, the scale of foreign direct investment is still very small. Moreover, looking at the practice of currency internationalization in major countries in the world, the process of currency internationalization in a country requires that the issuing country should meet the following conditions: economic strength occupies a large share of the global economy, political stability is high, macroeconomic environment is stable, market economy system is perfect, and economic development capacity is sustainable. Judging from the development of China, there are still many shortcomings in promoting the internationalization of RMB. Economic strength needs to be further strengthened. Compared with countries with relatively high degree of currency internationalization, there is still a certain gap in China's economic strength. At the same time, there are still some outstanding problems in China's macroeconomic environment. Therefore, the foundation for promoting RMB internationalization on a large scale at this stage is not stable. The existing economic system needs to be further improved. China's market economy system has achieved initial results, but there are still many problems that cannot support the rapid internationalization of RMB. Such as interest rate marketization, RMB exchange rate mechanism perfection, capital account convertibility and so on. Take capital account convertibility as an example. The main purpose of China's gradual model of capital account convertibility is to have as much time as possible to create preconditions for capital account convertibility. In short, these preconditions are stable macro-economy, sound micro-mechanism, healthy financial system, effective financial supervision and favorable international environment. Obviously, China has not fully met the above conditions. There are many contradictions in China's macro-economy, which is still unstable, the micro-mechanism needs to be improved, the financial system is fragile, financial supervision is weak, and the international environment is grim. There is still a long way to go before the preconditions for RMB capital account convertibility are mature. In this case, the "gradual mode" becomes an inevitable choice.