THE RMB INTERNATIONALIZATION, CHINESE FINANCIAL OPENNESS AND REFORM

GAO Haihong (Profesor i direktor, Odeljenje za međunarodne finansije, Institut za svetsku privredu i politiku, Kineska akademija društvenih nauka), gaohh@cass.org.cn

The RMB internationalization strategy is one of the major financial climate changes for both Chinese domestic and foreign financial transactions in the aftermath of the global financial crisis. The paper examines to what extent the RMB is used internationally and outlines the step-by-step approach to the RMB internationalization from the policy point of view. It emphasizes the important steps of the RMB strategy, including the RMB in trade settlement, bilateral currency swaps, regional coverage and offshore market development. It also focuses on the debate of the sequencing issue and the argument of “committed device”. Most recently, the Chinese government has reaffirmed its decision of financial opening and domestic financial reform and has laid out a timetable committing to make the RMB fully convertible by 2020. The paper considers such forward-looking policy steps, along with the new development of the so-called shadow banking, market-driven interest rate liberalization, and free float of exchange rate, to be the major elements for a great change of the Chinese financial sector in the years to come.

Keywords: the RMB internationalization, capital account opening, exchange rate flexibility, interest rate liberalization, domestic financial reform