The Gains and Losses for RMB’s internationalization
Saturday, June 20th, 2009
The reason of USD to become reserve currency, and still take 64.6 percent in global foreign exchange, its annual large amount income from external trade is definitely a necessary, and that is also an important reason that Japanese Yen can not take place it. This time’s financial crisis has little influence to the inland economy, an important cause is op to the open extent of financial policy. Now in order to the internationalization of RMB, china decides to develop Shanghai as the center of international finance, their funds market and finance should be opened totally, and RMB can be exchanged freely, that would cause different impulsion to the inland cities due to the degree of development, and whether the 1.3 billion people can really bear such a big strike, that should be a serious question for chinese government, especially in recent economy situation.
Even though there are a lot of question about the internationalization of chinese RMB, to a country ruled by ruler, so said, and so done, this decision would not be changed at all. While Taiwan has a close trade relation with inland, the internationalization of RMB will also affect their local economy to some extent, then how to performance well, that would be a test of wisdom and ability for the recent government.
However, everything has two sides, there will have a big impact to the inland’s currency, interest rate and exchange rate after RMB’s internationalization, and reduce the stability of national economy.
This Tuesday, the first top leader meeting held in Russia to discuss how to exert their influence in global economy, during the meeting, even though the Russia president has echoed the proposal from china about the super sovereignty reserve currency, which is projected in March., while the after meeting’s official communique doesn’t memtion it at all. Their obvious underplaying action is to avoid confusion in the world.
The reason for chinese government to put forward the idea of super sovereignty reserve currency or to make the RMB to be international, it aims to get international rights of speaking and the great profits from this internationalization. It mainly includes four big points: one is to do some preparing job for Shanghai to become the world financial center, and improve chinese international position and influence; second is to reduce the risk of using RMB as the payment for external trade, which is more convenient for the foreign fund adjustment; third is to strengthen the inland’s competition ability and service quality to the outer companies; the last one is to enhance the extent and depth in financial market, and accelerate the ideal resource distribution.