The role of offshore financial centers in the process of renminbi internationalization

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Title: The role of offshore financial centers in the process of renminbi internationalization
Author: Cheung, Yin-Wong
Organization: Suomen Pankki
Bank of Finland
Department / Unit: Siirtymätalouksien tutkimuslaitos (BOFIT)
Institute for Economies in Transition (BOFIT)
Series: BOFIT Policy Brief
Series number: 11/2014
Year of publication: 2014
Publication date: 24.9.2014
Pages: 31 s.
Subject (yso): valuuttamarkkinat
Keywords: Kiina; valuutat; kansainvälinen; pääomaliikkeet; sääntely; rahoitusmarkkinat; joukkovelkakirjat; Bofit-kokoelma; RMB; Hong Kong; China
JEL: F33
Abstract: Recently, China has been quite aggressive in promoting the international use of its currency, the renminbi (RMB). Historical experiences suggest that an active offshore market is essential for a global currency. Indeed, anecdotal evidence affirms the role of offshore RMB markets in pushing the RMB to the world. One should not, however, overplay the contribution of offshore markets. While offshore markets offer the opportunities to experiment with the global use of the currency, the overseas acceptance of the RMB is ultimately determined by both internal and external economic forces, and geopolitical factors. With its relatively small size, the offshore RMB is not likely to pressure China and alter its financial liberalization policy. A well-organized offshore RMB market will complement China's RMB internationalization policy, but could not raise the currency's global status beyond the level justified by it economic and political attributes. JEL Codes: F33

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