Yuan Internationalization: Status and Perspectives

Abstract

The article provides information about renminbi internationalization stages, actions taken by Chinese authorities in this field as well as suggests possible ways for further increasing usage of the currency in international operations. The analysis is based on international currency criteria used by IMF and SWIFT and well as suggestions of Russian and foreign researchers. Launching the process of renminbi internationalization China was looking to achieve a number of economic and political goals. Usage on the national currency in international operations increases the country’s prestige in the world, facilitates international transaction for domestic economic actors and allows influencing foreign counterparts. China achieved significant success in internationalizing its national currency in the past decade. Yuan has been part of IMF reserve currencies for more than three years. However, the share of renminbi in global settlements and investments is still moderate and does not correspond to the size of the country’s economy. The USA maintains their dominant role in the world’s financial system and is not interested in allowing China to increase its global influence. China is inviting its key trading partners to create yuan based international transactions system as an alternative to the US dollar. Despite the scale of the economy, volume of foreign investments and size of the internal securities market – international participants show relatively low interest for renminbi usage. Comparison of the anticipated goals and actions taken and with the current outcomes allows suggesting conceding amendments to the strategy of increasing renminbi usage in the world. This can be achieved by removing restrictions for international capital movements and facilitating access to yuan liquidity and instruments for international participants.