3 policies for Internationalization of RMB

 major player in international trade and finance continuously growing by 9 to 10 percent per annum for the past three decades the second- largest exporter of manufactur ed goods China

 relatively shielded from the global financial crisis of 2008 expansion of domestic demand rapid rate of bank credit state-owned banks and non-bank companies of the PRC are comparable with their counterparts in the Western world. Background

 Internationalize the RMB to make it as: a medium of exchange unit of accountstore of value Internationalization of RMB For transaction with non-resident

 allow RMB as a trade settlement currency between five mainland cities: Shanghai Guangzou Shenzhen Zhuhai Dongguan some other countries in East and Southeast Asia. 1 st policy

 build the RMB bond market to develop the RMB business in Hong Kong. issuance of RMB denominated bonds by five state-owned banks in allow commercial banks to issue yuan- dominated bonds in HK 2 nd policy

 the amount of bond issuances in Hong Kong has increased over time RMB 10 billion RMB 12 billion RMB 16 billion

 Extend the currency swap facility Argentina Belarus Russia Pakistan 3 rd policy

 The China-ASEAN Free Trade  1)increase the two-way trade 2)further use of the RMB for trade settlements.

  RMB is not a convertible currency  China controls capital flows  The core of the Chinese financial market is the underdeveloped state-owned banks  Market infrastructure & institutions are not comparable to those in HK and other world- class open financial markets Shortcomings

 The End