Research On Restrictions And Suggestions Of The Internationalization Of RMB

The internationalization of RMB is the objective requirement of Chinese economic development. After over thirty years of quick economic development, China has been playing a more important role in the world economy right now. By the end year of2010, China has accounted for9.39percent of gross world products, and9.8%percent in the world gross exports and imports of goods. Thus, China has been the second biggest economy entity in the world, only after the United States. While it is the continued double surplus of current account and capital account that makes China accumulating a large quantity of foreign exchange reserve, and much of that is U. S. dollar and Euro. Since2008year financial crisis and2010year Greece debt crisis, the Federal Reserve and the Europe Central Bank have taken easy-money policies one after another, thus it led to the appreciation of RMB relative to USD and EUR, which has making our foreign exchange reserve depreciation and exposing our export enterprises to increasing risks of exchange rate. In order to release the pressure on foreign exchange reserve increasing sharply, and reduce the exchange rate risk of export enterprises, our government has taking all kinds of steps to promote the international use of RMB. However, those measures do not work well, because there are several restrictions on the way of the internationalization of RMB, such as weak pricing power of the export enterprise, the underdeveloped financial market, the regulated rate of RMB in domestic deposits and loans, and backward bond market. All of those barriers dampen the enthusiasm of the non-residents to hold RMB.Thus, the author advances three main following suggestions to remove the restrictions:firstly, encouraging domestic enterprises to innovate independently and merge foreign assets which have positive synergistic effect with the merger, it must be good for domestic enterprises improving competition ability on the world market, and finally promotes the internationalization of RMB. Secondly, pushing forward financial market further reforms by means of full rate marketization on savings and loans, it can expand the international use of RMB. Thirdly, adopt the model of cross-border trade using RMB for settlement plus FDI plus RMB offshore market before RMB become a full free exchanging currency on the capital account.