China Ready for a Globalised RMB?

Abstract

Internationalising the renminbi (RMB) is a process of liberalising China’s capital account. More precisely, full RMB internationalisation needs full capital account convertibility. Only then will the RMB be trusted and accepted by the world as a global reserve currency. But opening up the capital account involves significant transitional risks which may wreak havoc upon the domestic system. So the relevant questions are whether China is willing to take these risks, and how far has it gone in making the required changes to achieve capital account convertibility and, hence, RMB-nisation.