Prospects for the Internationalisation of Chinese Currency

The global financial crisis ignited China’s move to internationalise the RMB. It signed several bilateral currency swap agreements, expanded settlements of cross-border trade transactions in RMB and allowed new forms of RMB operations in the Hong Kong offshore market. The main obstacles to the further internationalisation of the Chinese currency include the lack of exchange rate flexibility and limited access to capital markets. The implementation of proposals presented in a recent study by China’s central bank would be a milestone in the country’s integration into the global financial system and would create new opportunities for both foreign and Chinese investors.