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The 10th Anniversary of RMB Internationalization and Future Path – Constructing a New Ecological Circle of RMB Internationalization Under Financial Markets Opening

In the past decade, RMB, as an international settlement and reserve currency, have made progress during its internationalization amid combined efforts of policy-driven development and market traction. Looking ahead, the reversing of economic globalization and the resurgence of trade protectionism will present unprecedented challenges to international economic and financial situation. In response to the changing external environment, China has launched the second round of high-level financial opening since its entry into the WTO, involving banks, securities, funds, insurance, ratings agencies, third-party payment, and financial markets. With improving infrastructure and optimized supporting policies in the capital markets, interconnection between domestic financial markets and overseas markets has been enhanced, which could increase the linkage between domestic and external interest rates, and intensify exchange rate volatility. The dramatic adjustment of internal and external environment will then directly affect the development path of RMB internationalization.

The 10th anniversary of RMB internationalization: driven by both policies and the market

After the outbreak of the global financial crisis, the international financial markets generally recognized the institutional flaws of the current US dollar-centric international monetary system, and it is in urgent need of new public goods and solutions. The RMB has kicked off its internationalization process, which was driven by policies as well as the market. With the policy constraints on the offshore RMB business gradually relaxed, endogenous business demands in the offshore RMB market have increased, fulfilling RMB’s status as an international reserves currency, and steadily elevating the degree of RMB internationalization.

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Content provided by Bank of China (Hong Kong)
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