Eswar S. Prasad
- Published in print:
- 2016
- Published Online:
- October 2016
- ISBN:
- 9780190631055
- eISBN:
- 9780190631086
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780190631055.001.0001
- Subject:
- Economics and Finance, International
China’s currency, the renminbi (RMB), has taken the world by storm. The RMB is well on its way to becoming a significant international currency, one that is used widely in international trade and ...
More
China’s currency, the renminbi (RMB), has taken the world by storm. The RMB is well on its way to becoming a significant international currency, one that is used widely in international trade and finance. This book documents the RMB’s impressive rise, with China successfully adopting a unique playbook for promoting its currency. China’s growing economic might, expanding international influence, and the rise of its currency are all intricately connected. The book documents how China’s government has tied these goals together, enabling faster progress toward each of them. But there are many pitfalls ahead, both for China’s economy and its currency. If China plays its cards right, with reforms that put its economy and financial markets on the right track, the RMB is going to become an important reserve currency that could rival some of the traditional reserve currencies such as the euro and the Japanese yen. But this book argues that there are limits to the RMB’s ascendance—the hype about its inevitable rise to global dominance is overblown. The Chinese leadership’s apparent commitment to financial sector and other market-oriented reforms—coupled with unambiguous repudiation of political, legal, and institutional reforms—sets the RMB on a clear course. It will attain the status of a reserve currency over time but has essentially given up its claim of being seen as a safe haven currency, one that investors turn to for safety. The RMB will erode but not seriously challenge the U.S. dollar’s dominance in international finance.Less
China’s currency, the renminbi (RMB), has taken the world by storm. The RMB is well on its way to becoming a significant international currency, one that is used widely in international trade and finance. This book documents the RMB’s impressive rise, with China successfully adopting a unique playbook for promoting its currency. China’s growing economic might, expanding international influence, and the rise of its currency are all intricately connected. The book documents how China’s government has tied these goals together, enabling faster progress toward each of them. But there are many pitfalls ahead, both for China’s economy and its currency. If China plays its cards right, with reforms that put its economy and financial markets on the right track, the RMB is going to become an important reserve currency that could rival some of the traditional reserve currencies such as the euro and the Japanese yen. But this book argues that there are limits to the RMB’s ascendance—the hype about its inevitable rise to global dominance is overblown. The Chinese leadership’s apparent commitment to financial sector and other market-oriented reforms—coupled with unambiguous repudiation of political, legal, and institutional reforms—sets the RMB on a clear course. It will attain the status of a reserve currency over time but has essentially given up its claim of being seen as a safe haven currency, one that investors turn to for safety. The RMB will erode but not seriously challenge the U.S. dollar’s dominance in international finance.
Niv Horesh
- Published in print:
- 2013
- Published Online:
- September 2014
- ISBN:
- 9780804787192
- eISBN:
- 9780804788540
- Item type:
- book
- Publisher:
- Stanford University Press
- DOI:
- 10.11126/stanford/9780804787192.001.0001
- Subject:
- Economics and Finance, Economic History
This book offers an interpretation of the Chinese monetary system, charting its evolution by examining key moments in history – from BCE 600 up to the present. It places these moments in ...
More
This book offers an interpretation of the Chinese monetary system, charting its evolution by examining key moments in history – from BCE 600 up to the present. It places these moments in international perspective by comparing primary sources in multiple languages and across three millennia. The book begins exploring the trajectory of Chinese currency at the birth of coinage around the world and ends with the implications of the current global financial crisis for China and the rest of the world. Its narrative highlights the way that Chinese money developed in relation to the currencies of other countries, paying special attention to the origins of paper money, the relationship between the West’s ascendancy and its mineral riches, the linkages between pre-modern finance, debasement, and then inflation with the emergence of nation-statehood. The book then looks ahead to the possible globalization of the RMB, the currency of the People’s Republic of China against the backdrop of growing global uncertainties as to America’s federal debt.Less
This book offers an interpretation of the Chinese monetary system, charting its evolution by examining key moments in history – from BCE 600 up to the present. It places these moments in international perspective by comparing primary sources in multiple languages and across three millennia. The book begins exploring the trajectory of Chinese currency at the birth of coinage around the world and ends with the implications of the current global financial crisis for China and the rest of the world. Its narrative highlights the way that Chinese money developed in relation to the currencies of other countries, paying special attention to the origins of paper money, the relationship between the West’s ascendancy and its mineral riches, the linkages between pre-modern finance, debasement, and then inflation with the emergence of nation-statehood. The book then looks ahead to the possible globalization of the RMB, the currency of the People’s Republic of China against the backdrop of growing global uncertainties as to America’s federal debt.
Eswar S. Prasad
- Published in print:
- 2016
- Published Online:
- October 2016
- ISBN:
- 9780190631055
- eISBN:
- 9780190631086
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780190631055.003.0005
- Subject:
- Economics and Finance, International
This chapter describes the increasing use of the RMB in international trade and finance transactions. These developments have been driven by China’s increasing weight in global GDP and trade, and ...
More
This chapter describes the increasing use of the RMB in international trade and finance transactions. These developments have been driven by China’s increasing weight in global GDP and trade, and have also been actively promoted by the policies of the Chinese government. The RMB has become the fifth largest international payment currency. It accounts for settlement of about a quarter of China’s foreign trade and 2 percent of global foreign exchange market turnover. China has sanctioned fourteen offshore financial centers, in addition to Hong Kong and Macau, to promote the international use of the RMB. China has also signed bilateral deals with some of its key trading partners such as Japan and Korea to allow cross-border transactions to be settled using their own currencies rather than being intermediated through the U.S. dollar.Less
This chapter describes the increasing use of the RMB in international trade and finance transactions. These developments have been driven by China’s increasing weight in global GDP and trade, and have also been actively promoted by the policies of the Chinese government. The RMB has become the fifth largest international payment currency. It accounts for settlement of about a quarter of China’s foreign trade and 2 percent of global foreign exchange market turnover. China has sanctioned fourteen offshore financial centers, in addition to Hong Kong and Macau, to promote the international use of the RMB. China has also signed bilateral deals with some of its key trading partners such as Japan and Korea to allow cross-border transactions to be settled using their own currencies rather than being intermediated through the U.S. dollar.
Niv Horesh
- Published in print:
- 2013
- Published Online:
- September 2014
- ISBN:
- 9780804787192
- eISBN:
- 9780804788540
- Item type:
- chapter
- Publisher:
- Stanford University Press
- DOI:
- 10.11126/stanford/9780804787192.003.0008
- Subject:
- Economics and Finance, Economic History
Prognoses of China’s currency—Renminbi or RMB in short—going global have become a hotly debated topic in the economic and popular literature of late. While some analysts are tipping a gradual ...
More
Prognoses of China’s currency—Renminbi or RMB in short—going global have become a hotly debated topic in the economic and popular literature of late. While some analysts are tipping a gradual transformation of the RMB into the world’s next principal reserve currency in lieu of the US dollar, others contend that the deficiencies of China’s financial market will continue to preclude any such transformation for a long time to come. This chapter surveys the arguments put forward by either camp and to weigh into this debate not only through the prism of applied economic theory or political economy but also through the prism of economic history.Less
Prognoses of China’s currency—Renminbi or RMB in short—going global have become a hotly debated topic in the economic and popular literature of late. While some analysts are tipping a gradual transformation of the RMB into the world’s next principal reserve currency in lieu of the US dollar, others contend that the deficiencies of China’s financial market will continue to preclude any such transformation for a long time to come. This chapter surveys the arguments put forward by either camp and to weigh into this debate not only through the prism of applied economic theory or political economy but also through the prism of economic history.
Chen Shaofeng
- Published in print:
- 2017
- Published Online:
- January 2018
- ISBN:
- 9781479866304
- eISBN:
- 9781479826308
- Item type:
- chapter
- Publisher:
- NYU Press
- DOI:
- 10.18574/nyu/9781479866304.003.0011
- Subject:
- Political Science, Comparative Politics
The implementation of the China-ASEAN Free Trade Area (CAFTA) has deepened regional economic connectivity. Even so, challenges brought about by the potential of TPP, unsustainable trading patterns, ...
More
The implementation of the China-ASEAN Free Trade Area (CAFTA) has deepened regional economic connectivity. Even so, challenges brought about by the potential of TPP, unsustainable trading patterns, and ASEAN misgivings remain concerning the prospect of CAFTA. The author presents two trends: On the one hand is the trend that bilateral economic ties will be further enhanced and, looking ahead, that ASEAN member states will benefit more from CAFTA. On the other hand, distrust and misgivings about China are mounting among Southeast Asian countries, largely due to the unresolved territorial disputes. Hence, the gap between their close economic ties and strategic mistrust will likely grow. Countries in East Asian have to struggle between these conflicting trends.Less
The implementation of the China-ASEAN Free Trade Area (CAFTA) has deepened regional economic connectivity. Even so, challenges brought about by the potential of TPP, unsustainable trading patterns, and ASEAN misgivings remain concerning the prospect of CAFTA. The author presents two trends: On the one hand is the trend that bilateral economic ties will be further enhanced and, looking ahead, that ASEAN member states will benefit more from CAFTA. On the other hand, distrust and misgivings about China are mounting among Southeast Asian countries, largely due to the unresolved territorial disputes. Hence, the gap between their close economic ties and strategic mistrust will likely grow. Countries in East Asian have to struggle between these conflicting trends.
Yongding Yu
- Published in print:
- 2015
- Published Online:
- May 2015
- ISBN:
- 9780198714156
- eISBN:
- 9780191782572
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198714156.003.0006
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
Monetary cooperation in East Asia has been slow over the last decade, hampered by lack of leadership and political will. The Chiang Mai Initiative represents important progress but unilateralism in ...
More
Monetary cooperation in East Asia has been slow over the last decade, hampered by lack of leadership and political will. The Chiang Mai Initiative represents important progress but unilateralism in exchange rate coordination still prevails. The global financial crisis has failed to confirm the necessity of monetary cooperation and the European financial crisis has dealt a fatal blow to the aspiration for an Asian monetary union and an Asian common currency. Regional monetary cooperation will be more ad hoc in the foreseeable future. Renminbi internationalization reflects China’s intention to go its own way to safeguard its own interests. However, East Asia should not give up its efforts toward regional monetary cooperation. Perhaps, the wider use of local currencies in trade, investment, and financial transactions represents a new way forward. As the global economy may have entered a long recession, East Asia must shift its growth paradigm to rely on domestic demand.Less
Monetary cooperation in East Asia has been slow over the last decade, hampered by lack of leadership and political will. The Chiang Mai Initiative represents important progress but unilateralism in exchange rate coordination still prevails. The global financial crisis has failed to confirm the necessity of monetary cooperation and the European financial crisis has dealt a fatal blow to the aspiration for an Asian monetary union and an Asian common currency. Regional monetary cooperation will be more ad hoc in the foreseeable future. Renminbi internationalization reflects China’s intention to go its own way to safeguard its own interests. However, East Asia should not give up its efforts toward regional monetary cooperation. Perhaps, the wider use of local currencies in trade, investment, and financial transactions represents a new way forward. As the global economy may have entered a long recession, East Asia must shift its growth paradigm to rely on domestic demand.
Yung Chul Park and Chi-Young Song
- Published in print:
- 2015
- Published Online:
- May 2015
- ISBN:
- 9780198714156
- eISBN:
- 9780191782572
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198714156.003.0008
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
This chapter examines the role of Korea in promoting financial and monetary cooperation in East Asia. This process has been constrained by a lack of cooperation between China and Japan, the two ...
More
This chapter examines the role of Korea in promoting financial and monetary cooperation in East Asia. This process has been constrained by a lack of cooperation between China and Japan, the two dominant economies. The rise of China as a global economic power makes cooperation even more complicated. Korea finds a dwindling room for mediation between conflicting interests. The 2007–9 global financial crisis has called for a review of Korea’s exchange rate policy and its strategy for regional financial and monetary cooperation. The Chiang Mai Initiative went through its first market test and the outcome has not been reassuring. No country considered approaching China and Japan, although several faced liquidity shortages. RMB internationalization will weaken solidarity and undermine both the rationale and cooperative efforts for moving forward with cooperative initiatives, simply because neither Japan nor Korea can join the new RMB area.Less
This chapter examines the role of Korea in promoting financial and monetary cooperation in East Asia. This process has been constrained by a lack of cooperation between China and Japan, the two dominant economies. The rise of China as a global economic power makes cooperation even more complicated. Korea finds a dwindling room for mediation between conflicting interests. The 2007–9 global financial crisis has called for a review of Korea’s exchange rate policy and its strategy for regional financial and monetary cooperation. The Chiang Mai Initiative went through its first market test and the outcome has not been reassuring. No country considered approaching China and Japan, although several faced liquidity shortages. RMB internationalization will weaken solidarity and undermine both the rationale and cooperative efforts for moving forward with cooperative initiatives, simply because neither Japan nor Korea can join the new RMB area.
