Renminbi Internationalisation: Precedents and Implications

Tobin, Damian

Abstract

While it is commonly assumed that there are no known precedents against which to benchmark the internationalisation of the Renminbi (RMB), this paper argues that the PRCs own development experience provides a useful perspective on the internationalisation debate. In particular it indicates that lessons can be learnt from both the successes and the shortcomings of efforts to internationalise the RMB in the 1970s. During this period state-owned banks in Hong Kong played a central role in mobilising finance for foreign trade. Access to Hong Kong’s developed financial institutions allowed the PRC to maximise receipts from foreign trade as well as minimise the risks of undue swings in capital flows. The paper shows that although China no longer faces foreign exchange scarcity, economic reforms have not yet resolved vulnerabilities in China’s financial institutions and as such Hong Kong’s role in mitigating the risk of undue capital swings remains.

Citation

Tobin, D. (2013). Renminbi Internationalisation: Precedents and Implications. Journal of Chinese Economic and Business Studies, 11(2), 81-99. https://doi.org/10.1080/14765284.2013.789677

• Journal Article Type: Article
• Acceptance Date: Nov 13, 2012
• Online Publication Date: Jun 6, 2013
• Publication Date: Jun 6, 2013
• Deposit Date: Dec 20, 2012
• Publicly Available Date: Aug 21, 2019
• Journal: Journal of Chinese Economic and Business Studies
• Print ISSN: 1476-5284
• Electronic ISSN: 1476-5292
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 11
• Issue: 2
• Pages: 81-99
• DOI: https://doi.org/10.1080/14765284.2013.789677