2012年-IMF国际货币组织全球_RMB_Internationalization_OL5022nshoreOffshore_Links_36页_1mb

Summary of RMB Internationalization: Onshore/Offshore Links

Core Content

This paper explores the internationalization of the renminbi (RMB) and the inter-linkages between onshore (CNY) and offshore (CNH) RMB markets. It examines the historical evolution of major international currencies, such as the U.S. dollar, German mark, and Japanese yen, to provide insights into the factors that contribute to a currency's global adoption. The study also analyzes the current trajectory of RMB internationalization, emphasizing the role of recent policies and the potential for feedback mechanisms between onshore and offshore markets.

Main Views

• RMB's International Potential: The RMB has significant potential to become a widely used international currency due to China's large economic size, diversified trade structure, macroeconomic stability, and high growth rates.
• Capital Controls and Exchange Rate Stability: Despite strict capital controls and a managed exchange regime, onshore and offshore RMB exchange rates have moved closely since the RMB began trading offshore in mid-2010.
• Market Linkages: The paper finds that developments in the onshore spot market influence both spot and forward rates in the offshore market under normal conditions. Offshore forward rates, however, have a predictive impact on onshore forward rates.
• Volatility Spillovers: Volatility spillovers exist between onshore and offshore RMB markets, with these channels expected to grow as the offshore market develops further.
• Role of Offshore Markets: A thriving offshore market facilitates non-residents' access to the RMB and creates feedback and arbitrage channels that link onshore and offshore markets.

Key Information

Historical Experience of International Currencies

A. U.S. Dollar

• The U.S. dollar became a dominant international currency due to its economic size, financial market development, and the establishment of the Federal Reserve System (Fed).
• The Fed played a critical role in enhancing the dollar's credibility as a source of trade credit.
• The offshore market, particularly the Eurodollar market, was instrumental in the dollar's international success, as it allowed banks to operate outside U.S. regulations and offered more favorable conditions.
• The U.S. response to financial stress and the Triffin Dilemma led to the dollar's dominance, but also to the rise of offshore markets.

B. German Mark

• The German mark gained international status due to the strength of the German economy and the Bundesbank's reputation for maintaining currency stability.
• Despite domestic opposition to internationalization, the mark's use increased due to economic growth and the credibility of the currency.
• The mark's international role declined in the 1990s due to the rise of the U.S. dollar and the introduction of the Euro, which shifted the mark from an international to a regional currency.

C. Japanese Yen

• The yen's internationalization was limited by domestic regulations and the lack of deep financial markets.
• The yen's use as a store of value and in trade invoicing was hindered by the financial sector's lack of openness and the segmentation of capital markets.
• Despite efforts to liberalize the yen's offshore use, the yen's international role stagnated due to economic stagnation and a lack of liquidity provision.

RMB Internationalization: Recent Policies

• The Chinese authorities have focused on promoting the RMB in trade settlements with neighboring countries and developing RMB financial services in Hong Kong, SAR.
• The establishment of the RMB swap line with the Hong Kong Monetary Authority (HKMA) in 2010 and its expansion in 2011 helped ensure the smooth functioning of the offshore RMB market.
• The paper highlights the importance of maintaining a balance between offshore use of the RMB and capital flows onshore to avoid imbalances and ensure market stability.

Policy Implications

• The process of RMB internationalization is largely market-driven and depends on economic growth, currency credibility, and the development of the financial sector.
• China must proceed cautiously in modernizing and deepening its financial sector and gradually opening its capital account to promote the two-way use of the RMB.
• The development of offshore markets is crucial for the RMB to become a global currency, but it must be supported by stable and open domestic financial systems.

Conclusion

The paper concludes that the RMB has the potential to become an international currency, but its internationalization will depend on the interplay between onshore and offshore markets, the stability of the domestic financial system, and the gradual liberalization of capital controls. The experiences of the U.S. dollar, German mark, and Japanese yen provide useful lessons for China's path toward RMB internationalization.

Key Indicators of Reserve Currency Use (Shares of Total)

Source: COFER; BIS Bank of International Settlement, International Debt Securities Statistics and Triennial Survey of Foreign Exchange and Derivatives Activity