The Condition Analysis, Procedures Choices And Risk Prevention Of RMB's Free Convertibility

As the current account of RMB has been open for several years, it contributes to our country's economic development greatly. The fact is that our international trade is enhanced step by step, not liking the worry of people at that time that the openness of current account of RMB would destroy the stabilization of our country's economic development. After that, it is not difficult for us to discover the accelerated steps of the openess of the capital account of RMB through the system of QFII, China's entrance to WTO and the reform of RMB's exchange rate.So it is necessary to analyze the problems such as the condition, the way and how to keep away the risks,which are related to RMB's free convertibility. It is the way to compose this essay according to these three problems. From the condition analysis,we can made the conclusion that the major problem to RMB's free convertibility is on the system aspect,namely market system, which can be classified into the mechanism of forming RMB's exchange rate, the marketizion of interest rate and the establishment of RMB off-shore financial center in Hongkong or RMB liquidation center in Shanghai directly. The process of opening the capital account is to open the long term capital before the short term capital, open the direct captial before the financial capital, allow the capital's inflow before its outflow, open the security market before the foreign exchange market. In the end, we use KLR model to keep away the currency crisis during the process of RMB's free convertibility. At last, I think RMB's free convertibility is a subprocedure of RMB's internationalization.