The Preliminary Analysis On The Internationalization Of RMB

The internationalization of RMB is the inevitable result of China's long-term economic growth and increased political strength, which consistent with the interests of our national development strategy. RMB internationalization means China can get a position in the international status and have power to participate world rules establishment in international economic affairs. This power is a reflection of the country's political forces, as well as a potential international economic resource. In the evolution of the global financial system, the internationalization of RMB not only conducive to the multi-polarization development of the international monetary system, but also means China can reflect the nation's long-term interests and economic goals in the world economy by setting down the international financial rules to achieve its corresponding systemic benefit. The most direct monetary internationalization benefit is the Seigniorage, which means the international currency issuing country can get real wealth equivalent to the nominal value of currency from other countries. Apart from the Seigniorage benefit, the international currency also could bring many other indirect benefits.In 1997, the international reputation of RMB get an enormously elevation through the high degree of responsible attitude demonstrated by the Chinese government in the Asian financial crisis, which began to be accepted by neighboring countries and regions residents gradually as a trading and clearing currency and circulate in the surrounding areas. Because the continuous international credit elevation of RMB, which were caused by the constantly improving of China's international political status and sustained rapid economic growth and stable RMB exchange rate, plus the many years of surplus for balance of payments and high foreign exchange reserves, the RMB faced increasing appreciation from inside and outside, the whole world paid an unprecedented height focus on RMB. On July 21, 2005, the People's Bank of China announced a RMB revaluation of 2% against US dollar, the RMB exchange rate changed to a more flexible exchange rate mechanism and no longer kept a fixed rate with US dollar only. The changes in exchange rate mechanism shows that the RMB internationalization process has made a solidprogress.This article starts from Marx's discussion about the world currency, analyzes of the connotation of the international monetary and the current status of internationalization of RMB, predicts the internationalization of RMB is the inevitable result of China's long-term economic growth and increased political strength. Subsequently the article analyzes the risks and benefits of RMB internationalization and the internationalization route and requirements for RMB internationalization. It also indicates China should draw lessons from the internationalization of the world's three major currencies process. At last, the article points out that the internationalization of RMB should follow a way suited to China's national conditions and is a long-term process as china is still a developing country.