Challenges And Countermeasures Of Capital Account Liberalization In The Process Of RMB Globalization

China's RMB globalization process was transited from the RMB non-globalization policy stage to the non-globalization policy adjustment stage,and after decades of developing,this process is currently in the “globalization policy” stage.Also,the status of RMB in global currency market shows that our currency experienced a unique route of globalization,which means government used to have a strict ban on the RMB circulation and the restrictions were in the way of relaxing(until now).First,RMB had signs of peripheral at the year of 1993 and with deep endeavors of globalization done by Chinese government,China began to build strong economic relationships with peripheral countries such as Vietnam and Singapore.Later,along with China's political and economic development,RMB enjoyed a regionalization period in the early 21 st century.Now,IMF indicated that RMB has joined the SDR currency basket since October 1st,2016,creating a historical moment of emerging currency to join the SDR.This moment not only shows the praise of IMF to our government,also shows the determination of our leaders to this issue,which is “RMB globalization”.To further enhance the international level of the RMB,China's two important accounts(current account and capital account)in the balance of payments need liberalization gradually,to broaden the demand of the RMB in the world currency market.China has successfully opened the current account,enables non-residents of China use RMB to make transactions under the current account by carry out RMB investment.But for the opening of the capital account,China faces greater challenges.At present,China's exchange rate reform is continuing,with lots of problems unsolved.In fact,since the exchange rate system reform in 2005,China's foreign exchange management system has undergone tremendous changes.After giving up a pegged exchange rate system,central bank tries to push a managed floating exchange rate system in the direction of a long-term reform,though we talk about its success is too early so far.By now,the expectations of the appreciation of the RMB against the U.S.dollar haven't been eliminated,the “double surplus” in the current account and capital account continued and the RMB equilibrium exchange rate is too difficult to form.Beyond that,reality also has vulnerabilities in many aspects.Our highest institution of financial supervision-central bank and mainstream financial institutions do not have enough risk control ability to resist the shocks of capital account liberalization.Once the capital account is open,the financial involvement of foreign banks and the large number of short-term capital inflows and outflows will lead to a higher risk of financial crisis,as some low yield industries will be hit undoubted.This paper discusses the complex relationship of RMB globalization and capital account liberalization,focuses on the problems and challenges of China's capital account opening from the macro and micro views under the existing capital account management status and introduces typical international practices about capital account liberalization,putting forwards some inspirations and suggestions on the government financial supervision and capital account regulation reform.