The internationalization of RMB refers to the process that RMB can cross national boundaries, circulate abroad and become an internationally recognized currency for pricing, settlement and reserve. The expansion of the overseas circulation of RMB will inevitably lead to the internationalization of RMB and make it a world currency.
The significance of RMB internationalization includes three aspects: first, RMB cash enjoys a certain degree of circulation abroad; Second, and most importantly, financial products denominated in RMB have become investment tools of major international financial institutions, including the central bank. For this reason, the scale of the financial market denominated in RMB is constantly expanding. Third, it is necessary to realize a certain proportion of transactions settled in RMB in international trade. This is a general standard to measure the internationalization of currency, including RMB, of which the latter two points are the most important.
Second, the expansion of China's economic scale and the enhancement of its strength have gradually made the internationalization of RMB a trend.
In a market, a currency as a measure of value 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. China has become the second largest economy in the world. Since the pilot of RMB settlement of cross-border trade, the acceptance of RMB by Hong Kong, Macao, ASEAN and Russia has been increasing. The degree of economic integration between China and Asia will create a demand for the same value standard. 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. At present, RMB has also begun to circulate and exchange 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 formation of China's characteristics as an economic power and the improvement of its degree 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.
The trend of RMB internationalization should be the result of market choice, but there are still many problems that cannot support the rapid implementation of RMB internationalization. Such as interest rate marketization, RMB exchange rate mechanism perfection, capital account convertibility and so on. To truly realize the internationalization of RMB, we must have stable politics, sustainable macro-economy, sound micro-mechanism and market economic system, healthy financial system, effective financial supervision and a good international environment.
Three. What's good for China
1. 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.
2. Reduce exchange rate risks 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 will be greatly 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.
The internationalization of RMB is conducive to solving the exchange rate dilemma. China's sustained economic growth and trade surplus have led to increasing foreign exchange reserves. In order to cope with the macro-financial risks of exchange rate fluctuations, the government must also hold a large number of foreign exchange reserves. The sharp increase in foreign exchange reserves has led to a sharp increase in the pressure of RMB appreciation. Thus affecting China's economy, which is dominated by manufacturing. For economic powers, if the local currency can't conform to the trend of domestic trade growth and become an open international financial market and a pricing currency for trade, then the local currency can't become the main international reserve currency.
3. Earn international seigniorage income. After the internationalization of RMB, the most direct and largest income is the international seigniorage income. Seigniorage can be understood as the profit of issuing reserve currency, which refers to the difference between the denomination of paper money issued by the issuer and the cost of issuing paper money by virtue of the privilege of issuing currency. Issuing world currency is equivalent to collecting seigniorage from other countries and using it in our own country. You can buy resources from other countries simply by printing money.
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.
4. Enhance China's international status and 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, 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.
4. Not good for China.
Currency internationalization is the internationalization of rights and obligations, and it is a "double-edged sword" for the issuing country, which will inevitably generate corresponding costs while bringing benefits.
1. 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, thus affecting 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.
2. 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 flow of RMB cash 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.
3. It has certain influence on the economic and financial stability of China. 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.
Verb (abbreviation of verb) conclusion
The internationalization of a country's currency will have a comprehensive and profound impact on the macroeconomic structure and financial system of the currency issuing country. While enjoying the rights and interests of the world "seigniorage", it will also make its financial system more market-oriented, international and transparent. In a sense, this also means that the risk factors in the financial market are increasing significantly. 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. The internationalization of RMB will also have a far-reaching impact on the geopolitical pattern of western countries.