According to the RMB Internationalization Report 202 1 released by the Institute of International Monetary Studies of Renmin University of China on the 24th, the internationalization index (RII) of RMB is 5.02, a sharp increase of 54.20% year-on-year, setting a record high. The use of RMB has surpassed that of Japanese yen and British pound, making it the third largest international currency. In 2020, the RII in the four quarters was 4. 10, 5. 19, 5. 14 and 5.02, respectively, showing the characteristics of sharp rise and high fluctuation.
During the same period, the internationalization indexes of major currencies changed as follows: USD from 49.52 to 5 1.27, EUR from 29.84 to 26. 17, JPY from 3.34 to 4.9 1, and GBP from 4.00 to 4. 15. It is worth noting that in the first half of 2020, the international use of RMB exceeded that of Japanese yen and British pound, ranking third among major international currencies for three consecutive quarters.
Jason, director of the International Monetary Research Institute of Renmin University of China, said that if we want to see clearly the internationalization or international use of RMB, we need to change our perspective, that is, focus on the monetary perspective of big countries. There are some basic conditions for the currency of a big country, such as a unified monetary system, stable currency value, independent monetary system, international use or internationalization. Internationalization is only a condition for RMB to become a big country's currency, but it may not be the most important condition. Theoretically, if RMB wants to become a big country's currency, it seems that it has to follow the footsteps of the pound and the dollar and needs to follow suit. However, if we focus on historical logic, the renminbi must go its own way if it wants to become a big country currency.
The substantial growth of RII is mainly attributed to three aspects.
The report pointed out that the substantial growth of RII benefited from the following aspects:
First, the pricing and settlement function of RMB international trade continues to be consolidated: in 2020, the RMB settlement amount of cross-border trade under current account reached 6.77 trillion yuan, up by 12.09% year-on-year, accounting for18.44% of China's total import and export of foreign goods and services; Globally, the share of RMB settlement in international trade was 2.9 1%, an increase of 18.40% over the previous year.
Second, the financial transaction function of RMB has been significantly enhanced: in the case of the continuous downturn of global direct investment, the scale of RMB direct investment reached 38 1 trillion yuan, a year-on-year increase of 37.05%, the fastest growth rate in the past five years; By the end of 2020, the comprehensive proportion of RMB international financial transactions determined by direct investment, international credit, international bonds and bills reached 9.89%, up 84.23% year-on-year, which became the main driving force for RII to climb.
Third, the international reserve function of RMB is further manifested: at present, more than 70 overseas central banks have entered China's inter-bank bond market, and the monetary authorities of more than 75 countries and regions have included RMB in foreign exchange reserves; In the fourth quarter of 2020, RMB assets accounted for 2.25% of the global official foreign exchange reserves, up14.80% year-on-year; The relative share of RMB in Special Drawing Rights (SDR) is 10.83%, which is slightly higher than the previous year and basically the same as the initial weight.
The main challenges of RMB internationalization development
The report pointed out that RMB internationalization is facing a more severe external environment and more intense international currency competition.
First of all, RMB internationalization faces fierce competition between the US dollar and the euro. The supply chain disruption caused by the epidemic, the greater the downward pressure on the economy, the more panic the international financial market. As the main safe-haven currency, the stronger the network externality of the US dollar. The US dollar index climbed to the high of 103 again after four years, which inhibited the international use of RMB to some extent. The euro is also seizing the opportunity to consolidate its currency status. The EU withdrew from the digital chain and accelerated the construction of the digital euro, aiming at improving the internationalization level of the euro in the next five years.
The second is to speed up the convertibility of capital projects and keep the risk bottom line. International currency has a high demand for free use. In the initial stage of RMB internationalization, cross-border trade settlement was the mainstay, and the requirements for capital account convertibility were relatively low. Although currency internationalization is not necessarily based on full convertibility of capital account, financial transactions have become the main driving force of RMB internationalization at present. It is necessary to solve trade-offs, project matching, policy coordination and other issues, accelerate the opening of financial markets, and further reduce capital account controls. Based on the new development pattern of China during the Tenth Five-Year Plan period and the national economic and financial security objectives, it is urgent to explore the matching capital account convertibility objectives, sequence, risks and paths, re-evaluate the financial management framework, and establish a normalized management system and emergency mechanism for cross-border capital flows.
Third, the inflow and outflow of RMB and the imbalance of investment and financing functions. In 2020, under the situation that the epidemic spread overseas and the global currency "released water", a huge amount of foreign capital flowed into China in one direction to increase its holdings of RMB financial assets. This kind of capital flow is short-term and unstable, and it comes and goes quickly. If the external environment deteriorates or encounters a special moment of international political and economic game, large-scale centralized capital flight will inevitably impact the RMB exchange rate, endanger economic and financial stability and damage the confidence of RMB internationalization.
In sharp contrast to the RMB assets favored by international investment and the rapid expansion of global debt scale, the RMB has encountered obstacles in the field of international financing. According to the statistics of the Bank for International Settlements, the balance of RMB-denominated international bonds will shrink by about 30% in 2020 compared with the high point of 20 15 years. The unbalanced development of RMB capital flow and function is not conducive to the long-term development of RMB internationalization.
The report suggests re-examining the significance and value of RMB internationalization from the perspective of economic and financial security. Balance short-term interests and long-term interests and accelerate the internationalization of RMB during the 14 th Five-Year Plan period.
The report suggests accelerating the expansion of cross-border use of RMB during the Tenth Five-Year Plan period. We should attach great importance to the retail and personal payment of cross-border RMB transactions, improve the level of capital flow facilitation, give play to digital technology and digital currency's overtaking function in corners, and promote the cross-border use of RMB in service trade. In-depth exploration of the practical feasibility of RMB's international financial transaction function, continue to optimize and improve the bond market opening system, simplify and integrate the procedures and channels for overseas institutions to enter the market, provide a more friendly and convenient investment environment for international investors, and expand the issuance scale of panda bonds. It is necessary to break the interests of departments, encourage central enterprises and state-owned enterprises to take the lead in using RMB in international trade and investment and financing activities, and solve the institutional and policy obstacles that hinder enterprises from using RMB as soon as possible.
Smooth double circulation and promote RMB internationalization
Focusing on the theme of "Double Access and New Pattern of Currency Internationalization", the report comprehensively and deeply discusses some important issues such as Double Access and RMB Internationalization from the perspectives of the world and China, history and reality, opportunities and challenges. Under the new pattern of dual-cycle development, how to rely on the domestic market and use domestic and international resources to improve the modern financial system with high adaptability, competitiveness and inclusiveness, build a new open financial system with a higher level, and provide high-level financial support for key areas and key links in the new pattern of development.
Wang Fang, deputy dean of the School of Finance and Finance of China Renmin University and deputy director of IMI, pointed out that in the face of the impact of the epidemic and the tense external environment, the international use of RMB increased significantly year-on-year. The renminbi has steadily ranked among the major international currencies. Theoretical analysis and historical experience show that a high level of economic internal and external double circulation can support the high level of international use of sovereign credit currency. Accelerating the formation of a new pattern of dual-cycle development will create a major historical opportunity for RMB internationalization to reach a new level. Building a new pattern of dual-cycle development is a strategic plan related to the overall situation of China's modernization, which will promote high-quality economic development and enhance the hard and soft power of RMB in all directions. To build a new pattern of dual-cycle development, we should aim at the problem, grasp the key and make key breakthroughs.
First of all, to smooth the domestic big cycle, it is necessary to select the breakthrough points at the production end and the market end, grasp the two key issues of improving the ability of supply to create demand and improving the level of national governance, release the potential and charm of the domestic big market, and ensure the profitability and safety of RMB assets.
Second, smooth international circulation, and take the high-level opening-up based on China as a breakthrough to ensure the sufficient supply and convenient use of RMB. Through various forms of trade innovation, we will reshape the new advantages of Chinese-funded enterprises and institutions in international economic cooperation and competition and improve their right to speak.
Finally, give full play to the positive role of the "Belt and Road" and offshore RMB market in promoting dual circulation at home and abroad, and accelerate the formation of RMB internationalization network effect based on institutional rules and market application.
Looking ahead, China's capital market must have China characteristics.
Jason said that in China's policies over the past 40 years, the capital market has actually fulfilled its macro responsibility, that is, providing financial support for the high economic growth in the process of China's reform and opening up. Only from this perspective can we understand why China's capital market should be in line with international standards. In fact, from the financial point of view, China's capital market used to have China characteristics, and it will certainly have China characteristics in the future.
Wu Xiaoqiu, dean of China Capital Market Research Institute of Renmin University of China, pointed out that dual-cycle development is an important change in China's economic development strategy, and an important decision made according to the changes in the domestic and international situation, especially the changes in China's economic strategic objectives and China's economic growth structure. In the dual-cycle development strategy, how finance serves the real economy is actually facing important problems. It is necessary to promote the structural reform of China's finance through market forces, so as to promote China's industrial transformation and take the road of high-quality development.
First of all, the most important thing is to build an ecologically sound capital market environment around the capital market. Financial reform is mainly to complete industrial transformation in the dual-cycle development strategy and achieve high-quality development by building new financial formats.
Secondly, we should focus on the future and establish a modern financial concept. Around the development of the capital market, new financial formats and new capital formats will be formed. A deep understanding of this new financial format mainly focuses on the future and looks at the new financial format with a development perspective. It seems a little divorced from reality, but it is closely related to the future reality and represents the competitiveness of new industries.
Third, further improve the reform of the registration system. First, the reform of the registration system is of great significance. How to make scientific and technological enterprises become the main body of listed companies and how the capital market serves these enterprises is an important task of China capital market. Second, the reform of the registration system has achieved very good results. The reform of registration system has played an important role in China's industrial transformation, solving "bottleneck" projects and "bottleneck" technologies. Third, we should conscientiously sum up the experience and problems of the registration system in the past two years. Over the past year or so, the changes in the structure of listed companies in China, including the changes in investment concepts and valuations, all show that the mainstream of registration system reform is correct.
Basel regulatory rules are not conservative, closed and unchangeable.
Wang Zhaoxing, former vice chairman of China Banking and Insurance Regulatory Commission, China, said at this forum that the Basel Capital Accord is a concentrated expression of international financial rules and practices, and it is also a rule that China's financial industry must study and refer to in promoting internationalization and participating in international competition.
Wang Zhaoxing said that the Basel regulatory rules are not conservative, closed and unchangeable, but constantly adjusted and improved according to the changes of financial formats and financial risks. China's financial supervision department does not copy completely, but sets out from the reality of China, formulates and implements financial supervision rules according to local conditions, follows them, innovates and develops them, and makes some areas stricter and some areas more flexible, and pays attention to filling in the weaknesses and shortcomings of the supervision system. While promoting financial support for the real economy, we will firmly hold the bottom line that systemic financial risks will not occur.
Secondly, the implementation and changes of Basel regulatory rules in China. The rules formulated by the Basel Committee are not legal uniform standards, but reference standards. We should fully consider the characteristics of China's banking industry to learn from and implement relevant rules. The financial supervision department of China has adjusted and optimized the core tier 1 capital adequacy ratio, leverage ratio, risk weight and provision according to the actual situation, and implemented the recovery and disposal plan of high-risk financial institutions according to the national conditions, developed green finance and standardized the internet financial platform.