Internationalization Of The Rmb

Currency internationalization means the countries which issue the currency have the chance to reallocate the wealth of other countries. In different stage of the history, there was always certain currency acted as the core currency of the world. After the second World War, the US dollar becomes the core currency from which the United States get a lot of benefits.When the currency flows out of the country which issues it, then the currency becomes the international currency. The currency internationalization has different levels. When the international currency becomes the measure of investment and the store money beside of the measure of payment, it enters the high level of currency internationalization.Usually a kind of currency becoming the international currency needs some conditions, including having large scale of the economy, and high speed of economic development, and the big volume of international trade, and low inflation rate, and developed financial market, and so on.Because fast developing speed and other supporting factor, Now RMB is welcome in neighbor countries. RMB is used a lot in the border trade of China and travel consuming in Asia. According to the research of the central bank, the volume of RMB out of the country is already more than 200 billion. The currency position of RMB in the world especially in Asia is rising up. The RMB has started its way of internationalization and has the hope to become another important the international currency according to some economist.RMB internationalization can bring a lot benefits to China, such as acquiring the international seigniorage, reducing the foreign exchange reserves, cutting down the cost of international trade, fastening the development of the financial line, supporting the international investment, and so on. Of course, the development of RMB internationalization will also bring some cost, such as the cost of executing the economic policy, macro financial risk. Inclusion of the this analysis, we should insist on RMB internationalization, but we should take care and walk on small steps.Becoming international currency of the Asia is the reasonable goal of RMB internationalization. According the experience of US dollar, and Germany Mark, and Japanese Yen, The supporting of the government in RMB internationalization is very important. Now the Chinese government has acted as important role in RMB internationalization.Several measures of supporting RMB internationalization will be important: the first, supporting RMB using as the medium of payment in international trade; the second, interest rate deciding by the market; the third, RMB convertible in the capital account beside of the current account; the fourth, supporting the development of RMB offshore market.