Research On The RMB Convertibility In Capital Account

After the second world war, with the change of international situation, financial liberalization and reform started all over the world. In 1980s, many developing countries joined the reform and the trend of economic integration strengthened. But the financial crisis after 1994 had negative effect to world economy. Both the theory and practice showed that the liberalization of capital account has two-side effects. RMB capital account convertibility is an important step to the financial system reform in China after current account convertibility in 1996 and the entrance into WTO in 2001. By studying the theory of the finance liberalization and the international experience of opening capital account, this paper makes preliminary analysis of the current situation and problems on the open of RMB capital account and raise the reform measures to stably realize the RMB convertibility in capital account.This paper consists of three chapters. Chapter one gives a brief introduction of the theory and practice on capital account convertibility, including capital control and finance liberalization theory, the contents and sequence theory, and further analyzes the international practice, and finally concludes the experience. This chapter sets the background for the following ones. Chapter two analyses the importance of capital account convertibility in China, discusses the current situation of opening capital account in China and its positive influence in the history, and gives the challenges. Chapter three concludes the significant macro-economic preconditions for China to realize the open of capital account. By discussing the current problems, this paper raises the suggestions of the strategy and reform measures. And in the end, a conclusion is made for the whole paper.