Published in the easy to borrow money to save financial markets and the real economy; the Fed can easily prevent the violation of the precepts of the monetization of fiscal deficits, direct purchase of U.S. Treasury bonds to cover the gap between supply and demand may occur. And if the United States accumulated external debt, when the Americans can not stand by the dollar devaluation against other major currencies, Americans can reduce the real burden of debt in the Danxizhijian. Of course, Americans do so will reduce the dollar's credibility as an international currency. But in response to the background of the financial tsunami century , the Americans still expansionary fiscal and monetary policy set the negative externalities expense and blindly to save the domestic financial market and the real economy as a standard. As for the long term depreciation of the dollar, inflation pressure, as a former senior official said the United States, U.S. dollar is our currency, but it is your problem.
export-oriented development strategy, as a direct consequence of China's reform and opening up 30 years in the accumulated foreign exchange reserves of about 2 trillion dollars, which is blood and sweat of generations of the Department of the Chinese people a valuable national asset. In China 2 trillion in foreign exchange reserves, the dollar accounted for about 60% -70% of assets, mostly U.S. Treasury bonds. However, in the U.S. fiscal deficit and the Fed's unprecedented quantitative easing, behind the U.S. Treasury market fell and the dollar value of the dual risks. Once these risks evolve into reality, then China's foreign exchange reserves will suffer huge losses. Chinese people through the export-oriented strategy, distorting factors of production costs and access to resources and the environment wealth, could face huge losses.
learn from their mistakes. From the second half of 2008, the Chinese government significantly accelerated the pace of restructuring of international financial strategies. The core idea of the strategy is to reduce China's foreign trade, cross-border investment and foreign exchange reserve management, the dependence on the dollar, which will control the risk of depreciation of the dollar within a certain range. China's new international financial strategy from near and far are divided into three levels: RMB internationalization, regional monetary cooperation and the international monetary system reconstruction. Since the last six months, the Chinese government go hand in hand in the three levels, and each gains. RMB internationalization progress achieved in stages the signing of a bilateral currency swap and cross-border trade settlement currency RMB as the advance of experimental work. regional monetary progress made in co-operation phase in February 2009 event, the People's Bank of China Governor Zhou Xiaochuan at the March 2009 support. by this paper, the benefits, special drawing rights (SDR) again become a hot issue of IMF reform.
three levels of Chinese government strategy to promote international financial difficulties and resistance are different. different levels The international financial strategy requires a different level of communication, coordination, game theory and cooperation, the Chinese government at different levels have different initiative. the international monetary system and reconstruction needs in the global consensus on need for regional monetary and financial cooperation in East Asia the formation of collective action, compared to RMB internationalization can directly forward by the Chinese government, and coordination and communication with trading partners as long as you can. Therefore, the internationalization of RMB has actually become in the near future the Chinese government focus on promoting the area. and even the media comments, the Chinese proposed issue of global super-reserve currency, but is out at large, and the internationalization of RMB is stealing a march in the meaning of the title.
progress in the internationalization of RMB currency
International (Currency Internationalization) is country-specific currency from the International Monetary money growth process. The International Monetary refers to global trade and investment play a pricing scale, medium of exchange and store of money, It may be the national currency (eg U.S. dollars), but also may be a regional currency (for example, euros), or some sort of precious metals (eg gold). So far, successful international global currencies including the U.S. dollar, British pound and the euro.
China calls on the internationalization of RMB first appeared in the 1990s. It was not until the sub-prime crisis broke out before the internationalization of the RMB has not become a real option to consider the Chinese Government. RMB internationalization process of restricting factors include the following categories: The first stage of economic development is limited . Generally speaking, developed countries will have a strong international currency motivation, while China remains a developing country, the level of per capita GDP and per capita resources, with a very low volume;
second is the economic system restrictions. First, China has not yet fully open capital account, the yuan fully convertible non, which limits the exporting of Chinese yuan by capital; Second, since China has long been the implementation of export-oriented development strategy, which means that the RMB exchange rate is not free floating, there is government intervention in large part, this restricts the inside and outside the cultivation of RMB forward exchange market, thus limiting foreign residents and businesses will hold the renminbi (RMB exchange rate because of the lack of risk-hedging tool holders) .
third category is the development stage of China's financial market restrictions. At present, except B-share market and the qualified foreign institutional investors (QFII) mechanism, foreign investors may not directly invest in China capital market, China is also a lack of yuan-denominated foreign financial products, which limits the growth of the RMB as an international reserve currency.
The fourth category is the Chinese government's foreign policy restrictions. The Chinese government has long pursued a low profile and do not take the lead foreign policy, so there has to promote the internationalization of the currency strong will.
However, since September 2008 the U.S. subprime mortgage crisis into a global financial crisis, the Chinese government's attitude on the Internationalization significant heat transfer from the cold since the end of .2008, the Chinese government has two aspects made significant progress. First, China has with South Korea, China, Hong Kong, Malaysia, Belarus, Indonesia, Argentina and other six countries signed a total of 650 billion yuan, 3-year period of bilateral currency swap; Second, China began to speed up cross-border trade settlement in RMB in the pilot .2008 December, the State Council made clear that Guangdong and the Yangtze River Delta region will be Hong Kong and Macao, Guangxi and Yunnan-ASEAN trade in goods with the RMB settlement pilot. two sessions, central bank officials, the State Council has confirmed that the renminbi in Hong Kong cross-border settlement will commence a pilot by the end of March may be introduced between the PRD and Hong Kong yuan trade settlement system. State Council executive meeting on April 8 launched the first cross-border trade in yuan Clearing the pilot cities, including Shanghai and Guangdong Province, Guangzhou, Shenzhen, Zhuhai, Dongguan City 4.
bilateral currency swap and the RMB settlement of cross-border trade has a complementary relationship. For example, if the foreign importer in the import of Chinese goods, and need to be paid in RMB, the importer can make to the country's commercial banks apply for RMB loans, the country's commercial banks to central bank lending to the RMB, and the central bank is the central bank through currency swap with China to funding sources to solve the problem of RMB. Therefore, the bilateral currency swap to a large extent the Chinese government does not cooperate with other national government initiatives to respond to crisis, but for the RMB settlement of cross-border trade matching system of the pilot arrangements. If the Chinese government to help other countries deal with the financial crisis, the most appropriate way to U.S. and other countries to sign bilateral swap, because the RMB can not be used to intervene in the foreign exchange market in other countries.
Conversely, if used properly, the bilateral currency swap can be Overseas Chinese government recovered a channel for RMB. For example, when foreign exporters get through to the Chinese yuan payment for exports, the exporters to the country's commercial banks exchange currency, the country's commercial banks to further the conversion of the currency the central bank, eventually the central bank's Bank of China through bilateral currency swap and eventually returned to the Chinese renminbi.
is not difficult to predict, the Chinese government will continue for some time in the future to accelerate the internationalization of the RMB. On the one hand, China will be more number of countries have signed bilateral currency swap, especially with Thailand, the Philippines, Vietnam and other ASEAN countries and China Taiwan, Russia and other major trading partners; the other hand, China will approve more RMB settlement of cross-border trade in the pilot cities, particularly closely with the ASEAN countries in Kunming, Nanning, and focus on the development of the financial center of China and Tianjin, the city.
RMB internationalization benefits and costs
In fact, if we look back the history of international finance is not difficult to find, not all power at all times will unswervingly push forward the local currency international. Britain and the United States seems to have been the currency international admirers, while Japan and Germany seemed quite a long time on the currency internationalization is not a cold. to clarify the major countries of the different attitude toward international currency, we must analyze the internationalization of the currency benefits and costs facing the (risk).
general, the currency issuer of international currency will bring the following benefits:
First, the currency States can impose a lot of money to foreign users of seigniorage (Seniorage) income. seigniorage is the cost of issuing currency of a country and currency to exchange the difference between the actual value of resources. A is often used to explain the example Seigniorage is U.S. Government Printing a $ 1 bill of materials and labor costs only 3 cents, and that 1 dollar bill worth $ 1 was able to exchange goods. At present the U.S. dollar in the global circulation of more than 900 billion U.S. dollars in cash, about three circulation outside the United States two-thirds, which means that the stock of U.S. seigniorage collected at least 6,000 billion U.S. dollars. a tax on the U.S. Mint research shows that access to the U.S. average of about 25 billion U.S. dollars in seigniorage revenue, since World War II cumulative gain of about 2 trillion U.S. dollars in the.
Second, the international currency means currency to local currency to the country to foreign governments and investors in debt. This means that currency country can borrow money to avoid currency and currency between the wrong with the This will cause the currency to depreciate, which in the long term damage to the currency's international credibility.
Third, the international currency means that countries can use currency Foreign currency for the settlement of trade and international investment, and can interfere with the currency exchange market , which reduces the currency issuing countries need to accumulate reserves. For China, this avoids the excessive accumulation of foreign exchange reserves caused by excess liquidity and inflation caused by excess liquidity and asset price bubbles. In addition, you can reduced because of the exchange rate loss of value resulting from foreign exchange reserves.
Fourth, the international currency exchange rate changes help to reduce uncertainty on international trade and the impact of international investment, and lower transaction costs resulting from currency exchange, thereby contributing to China's foreign trade and investment.
Fifth, the international currency markets can help China's financial development and growth. thorough internationalization of the currency means the currency issuing countries must fully open its capital account and the free convertibility of the currency, making its financial markets to mobilize global resources for global enterprises. to the national currency-denominated financial products will be released worldwide, the country's currency will grow into truly global reserve currency.
as the other side of the coin, currency international currency issuing countries will also bring the following risks:
First of all, the currency international currency will significantly increase the country's macro-control more difficult and undermine the government's ability to achieve its macroeconomic objectives. For example When the currency issuing countries of economic overheating and inflation pressure, according to common sense, the country's central bank will raise interest rates by means of macroeconomic control. However, when the national currency fully international, due to the completely open capital account, the central bank to raise interest rates will lead to a large number of international short-term capital inflows, thus exacerbating the domestic liquidity, which could exacerbate the country's domestic economic overheating and inflationary pressures and asset price bubbles, resulting in regulatory policy and regulatory objectives poles apart.
Second, the internationalization of the currency means that foreign speculators can more easily access the currency, thereby increasing the local currency against the risk of speculative attacks and strength. When the national currency's exchange rate is inconsistent with the fundamentals of their economies (in particular, there are significant national currency overvalued exchange rates), the international speculators can borrow the money through various channels and in their focus on selling the foreign exchange market in order to suppress the currency exchange rate. If you devaluation of the currency so the one hand, international speculators to earn huge profits, the other aspects of their external debt burden would suddenly increase, possible outbreak of payments crisis.
again, from the international experience, international currency long period of time generally associated with the process of the currency appreciation, this is because foreign investors are more willing to hold have long-term appreciation trend of the currency. and sustained currency appreciation not only may affect their export competitiveness, but also may lead to foreign currency-denominated domestic foreign currency assets is a significant book losses. The cost for the export-oriented economy, or have huge foreign exchange reserves of the economy is particularly significant. This can also explain why Japan, Germany and other economies for a long time reluctant to promote the internationalization of the currency because it means that these countries must change the export-oriented development strategy. The foreign exchange the number of reserves in the world and first in China in promoting the internationalization of RMB, the yuan's foreign exchange reserves caused by the diminution in value appreciation of the risk is we have to consider.
However, the RMB appreciation could lead to the market value of China's foreign exchange reserves has shrunk and can not be We give the reasons for promoting the internationalization of the RMB. First, as mentioned, to promote the internationalization of RMB has a variety of benefits and risks, is to promote the internationalization of RMB should be the Government to fully consider the benefits and risks of making a rational choice, after; s Second, once China has accumulated a lot of dollar-denominated foreign exchange reserves, China has always faced the U.S. dollar against the RMB devaluation risk, and the outbreak of the subprime crisis and the deepening of the risk is magnified. Chinese government is through a variety of diverse depreciation of the dollar means to reduce the risk of very limited scope. Instead of maintaining the existing policy to increase the value of foreign exchange reserves, hopes the U.S. government on the implementation of responsible monetary policy, RMB appreciation as the initiative to implement, with the appreciation of the structural adjustment of the RMB income of RMB internationalization of income received coins to make up for the appreciation of the currency loss of value due to foreign exchange reserves. In the course of the rise of a large country, the occurrence of the loss is inevitable. The key is to have great wisdom and great courage, capable of long-term in a careful and accurate cost-benefit accounting.
prerequisite of controllable risk to further promote the internationalization of RMB
under current conditions, the biggest obstacle to the internationalization of RMB is China's immature capital market development, financial institutions, institutional investors and retail investors have great experience and a lack of capacity, regulatory institutions to manage capital flows are not sufficient experience and ability, which limits the short term the Chinese government fully liberalized capital account convertibility of RMB possibilities. On the contrary, I believe that China, the capital controls is to prevent the financial crisis last line of defense. in China's financial markets, financial institutions, investors and regulators basic development mature, China can not be hastily put open capital controls. This means that the internationalization of RMB is bound to be a long-term, gradual and systematic project.
How, then, under the premise of risk control to further promote the internationalization of the RMB it?
First, the author believes that the current China Government, through the signing of bilateral currency swap and speed up cross-border trade settlement currency RMB as a pilot project to advance the practice of internationalization of the RMB, the direction is correct. bilateral currency swap a good break through China's currency exchange under the capital some of the restrictions. complement the work of both, remains to be further strengthened. The Chinese government with all the ASEAN 10 +3 and East Asian countries outside the region and China have close economic and trade exchanges of the countries or regions (such as Russia, Brazil, Australia, a some African countries and Latin American countries, etc.) to sign a bilateral currency swap, cross-border trade and accelerate the settlement of RMB in the experimental work and payment.
Secondly, in order to allow foreign governments and investors willing to hold long-term renminbi, the Chinese government needs to establish the following three markets. The first market is the offshore RMB market, this market allows foreign investors to set up outside China will be converted between the renminbi and other currencies, thereby reducing the cost of holding the RMB exchange; the second market is the offshore renminbi forward exchange market (also in China, but need to open to foreign investors), the establishment of this market allows foreign investors to circumvent the holding of assets or liabilities of RMB exchange rate risk. Although Singapore and Hong Kong There renminbi non-deliverable forward foreign exchange market, but so far these markets are not well predict the future trend of the RMB; third market is the offshore renminbi financial product markets. only attractive to overseas investors can buy in RMB denominated financial products, they only willing to hold a longer period of time a large number of RMB yuan to become a real reserve currency. In other words, the establishment of the three markets to lift foreign investors in freely convertible currency, to avoid exchange rate Risk and investment in financial products, review the concerns, encourage them to more permanent and more scale to hold the RMB. Once completed these three markets, it means that the internationalization of RMB into a new stage of development.
again, Hong Kong RMB internationalization process may be important in the winner of its international financial center is expected to strengthen further. This is because Hong Kong will become China's important to promote the internationalization of RMB large extent, supporting Hong Kong, Hong Kong and the Pearl River Delta region has been formed in the trade inextricably linked; Secondly, Southeast Asia, Hong Kong itself is an important free port and trade center; Third, mainland China, Hong Kong is the most offshore renminbi circulation active sites, but also in Southeast Asia and out of mainland China's renminbi port; fourth, on the basis of the above-mentioned advantages, Hong Kong may become the Chinese government has established an offshore RMB clearing center, offshore renminbi forward foreign exchange market and the RMB-denominated financial products outside the market of choice land. In fact, since June 2007, there have been five financial institutions in the Mainland of China capital market in Hong Kong 7 batch of renminbi bonds issued, the funds raised 22 billion yuan. This marks the outside of Hong Kong is expected to be RMB financial products The main issue of land.
Finally, the internationalization of RMB is a larger goal is to become the Chinese mainland, Hong Kong, Macao China, China Taiwan formed the achievement of the goals requires not only the economy more closely integrated, but also need the political wisdom of leaders on both sides and therefore require longer accumulation.
However, to ensure that the process of internationalization of the RMB to be successful, the Chinese government must be strong promote the internationalization of the RMB, while speeding up structural reforms in China.
First, the Chinese government should reduce the intensity of the foreign exchange market intervention, so that more of the RMB exchange rate determined by market forces. the sub-prime crisis broke out show , with a potential production capacity of China to further expand the world market the capacity of exports to China must be limited. This means that the government must adjust the export-oriented development strategy. In order to alleviate structural imbalances in China's internal and external (internal imbalance is imbalance service and manufacturing industries, the external imbalance is sustained double surplus balance of payments), the Chinese government must enhance the flexibility of the RMB exchange rate formation mechanism, the contents of tolerance in a period of appreciation. We have repeatedly pointed out in the relevant research, reasonable and balanced level of the RMB exchange rate will help to correct structural imbalances and promote sustainable economic growth in China.
Second, the Chinese Government should as soon as possible interest rate market. interest rate market is to enhance the flexibility of RMB exchange rate one of the prerequisites China's financial market is one of the prerequisites to continue to grow. As a long time in the control of China's level of domestic interest rates, and limited financing channels for private enterprises, resulting in lower domestic interest rates. interest rate market, the interest rate rise is not only conducive to squeeze out of inefficient investment, deposit and loan spreads also help reduce China's commercial banking system to promote further reform.
Thirdly, the Chinese Government must fully open to foreign investment in China's financial sector prior to full liberalization of China's private enterprises financial sector. a long time, private enterprise and investment in production and business financing, suffer from state-owned enterprises and foreign-funded enterprises squeezed. China's financial industry before the full opening up a comprehensive opening up, China's private financial enterprises have a real opportunity to grow. The Chinese government should do Kuaifang Kai of private capital into the banking, securities, insurance and trust sectors, restrictions on the equal treatment of state-owned capital and private capital.
In short, China has now entered the reform and opening up Sham Shui Po District, across the river by feeling the stones to the traditional development strategy is also the time of adjustment. At present no major reforms have been happy, income and risk was significantly asymmetric. Therefore, the Chinese government should consider the long-term development, and build their own international financial strategies. The RMB internationalization will be the pillars of international finance one of the new strategy. To promote the internationalization of the RMB, we must dare to bear the pain, but also the premise of risk control as soon as possible to promote the internationalization of the RMB. In addition, we You can also take advantage of the internationalization of RMB provided growing source of power to the full and rapid structural reforms.
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