Policy Difficulties In Internationalization: Investment Return To Domestic Market

< p > when the RMB stock in the offshore market reaches a certain level, it will generate the demand for investment to return to the domestic market.

Although trade settlement under current account is one of the channels for cross border circulation of RMB, investment and financing businesses under capital account are more diverse and larger.

Therefore, with the further development of the offshore RMB market, it is necessary to further liberalize the convertibility of RMB capital account on the basis of current account settlement.

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< p > the problem is that the initial development of the RMB a href= "//www.sjfzxm.com/news/index_c.asp" > offshore market < /a > is highly dependent on the size and extent of RMB reflow within the territory. Although it can be used to control the degree of opening up of China's capital market and the approval of foreign exchange quotas with the help of "RMB foreign exchange", it will also restrict the development of offshore market.

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The process of RMB internationalization will inevitably touch the opening of China's capital account and capital market inevitably. < p >

The lessons learned from other countries have proved that we must realize that if the internationalization of RMB is likely to pose a greater risk, it is mainly not the expansion of monetary functions and geographical areas, but the policy mix and process of capital account liberalization and free floating of exchange rates.

Chen Daofu said.

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< p > however, when a country's currency becomes commodity a href= "//www.sjfzxm.com/news/index_c.asp" > price fixing currency < /a >, trade settlement currency and reserve currency, the adjustment of exchange rate to the economic imbalance is invalid.

Zhou Xiaochuan, the governor of the central bank, has said that after the breakup of the Bretton Woods system, the financial crisis has become more and more frequent, and the price paid by the whole world for the existing monetary system may exceed its profit.

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< p > not only is a href= "//www.sjfzxm.com/news/index_c.asp" > reserve currency < /a > the user country has to pay a heavy price, but the issuing country is also paying an increasing price. "The crisis may not be the intention of reserve currency issuing authority, but it is the inevitability of institutional defects."

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< p > therefore, the monetary authority can neither ignore domestic goals in order to enhance the international function of its own currency, because it often fails to take account of different objectives at home and abroad: it may not satisfy the growing demand of the global economy because of the need to curb domestic inflation, but may also lead to global liquidity because of overstimulating domestic demand.

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In view of this dilemma, creating an international reserve currency that is decoupled from the sovereign state and can keep the currency stable for a long time, thus avoiding the inherent defect of sovereign credit money as reserve currency, has always been the ideal goal of the international monetary system reform.

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< p > only in 2013, the people's Bank of China signed bilateral currency swap agreements with 5 foreign currency authorities such as the European Central Bank and England bank. The total size of the new signing agreement is RMB 752 billion yuan.

Before that, the central bank has signed bilateral currency swap agreements with central banks or monetary authorities of many countries such as Korea, Malaysia, Argentina, Iceland, Singapore, Indonesia and the United Arab Emirates since the end of 2008.

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