RMB Internationalization: Prospects And Challenges

In recent years, with the strength of chinese ecnomic and rapid development of foreign trade, RMB appreciation and the expanding scale in neighboring countries and the region of RMB become more and more obviously. An prophecy of RMB will be an international currency and the voice become more and more loudly. The U.S financial crisis of 2007 is a warning to our government that only promoting the internationalization of the RMB to ensure the safety of foreign exchange assets, and to enhance China's international status. After the financial crisis, our government took a number of measures to promote the internationalization of the RMB. Such as having a currency swap with neighboring countries, promoting cross-border trade in RMB business in Hong Kong vigorously timely issuing RMB bonds in Hong Kong. However, with the background of strong academics at home and abroad calling for internationalization of the RMB and the government of china promoting the internationalization of the RMB vigorously, should we analyze calmly whether China have the conditions to promote the internationalization of RMB? This article will analyze this. This paper introduces the theory of internationalization of the RMB and the status and the meaning of the internationalization of RMB firstly, analyzing the formation mechanism of RMB internationalization and the impaction of our fiscal policy, monetary policy and exchange rate policy. Then calculate the revenue of RMB internationalization focus on the perspective of seigniorage. Having a conclusion:this stage China not only can not get seigniorage revenue, but also pay huge currency seigniorage to the United States, Britain, Japan and other countries per year. According to the economic growth of world and china, witer forecast the revenue of RMB internationalization if we push forward the internationalization of RMB gradually, Then we analyze the risks and costs internationalization of RMB. Then analyse the resistance of the renminbi regionalized thought the experience of Internationalization of the yen and the regional competition of RMB and yen. The end of paper is the feasibility analysis of conditions for the internationalization of RMB.I believe that our country has certain conditions, but far from enough. In short term, the internationalization of RMB has a huge cost and risk. In long term, we should not promote or hinder the internationalization of RMB intentionally. RMB internationalization will be a natural ripe until achieving the improvement of the domestic financial market, the basic completion of economic, the structural adjustment, industrial restructuring and upgrading and the really improvement of technical content of our products. At that time with the widespread international acceptance and use of RMB, RMB internationalization can be achieved.