According to a senior central bank official, China is rethinking its strategy for the internationalization of the yuan after recently completing a comprehensive review.
“As everyone knows in the past, the internationalization of the RMB clings to market principles,” said Zhu Jun, director general of the People’s Bank of China’s international division, at the Bund Summit in Shanghai on Saturday. “The role of the authorities was focused primarily on removing policy barriers to the free use of currency. At this time, we feel that there are some complications of domestic and foreign situations. ”
Zhu said that the government could be more proactive with policy support to facilitate the role of the market. For example, the central bank may improve bilateral currency exchange agreements to better promote trade and investments, and the yuan may try to coordinate cross-border settlements and various means of payment infrastructure.
Meanwhile, authorities removed existing barriers to the internationalization of the yuan, with a stable liberalization of the capital account and increasing RMB exchange rate flexibility, as well as improving liquidity in the bond market.
While China has made some progress over the years – boosting offshore yuan trade, winning official reserve-currency positions from the International Monetary Fund, and starting price commodity contracts in yuan – the renminbi is a smaller player on the global stage, with 2% of the market. Is share.
And while the continued opening of China’s financial markets to foreign investors has generated influx, foreign ownership of mainland stocks and bonds is relatively modest. China’s capital account, a term for the flow of money across borders, is currently subject to important regulations on the transfer of yuan.
Separately, central bank Governor Yi Gang said on Saturday that reform of the system of formation of the yuan exchange rate and internationalization of the currency should be jointly promoted with the financial opening.
“Yuan internationalization needs to be market-oriented,” he said. “The regulator’s main job is to ease restrictions on cross-border use of currency, and let it take its course.”
– Assisted by Charlie Zhu, and Jun Luo