| Generally speaking, international currency is the money which plays the role of international settlement, financial investment and reserve currency. Gold and pond is international currency in the periods of gold standard. In the periods of Bretton Woods System, dollar plays the role of international currency. Several moneys, such as dollar, euro, Japanese Yen and so on, become the international currency in the periods of Jamaica system.International currency often exerts remarkable influence on its home country about economics and policy. First of place, three economical benefits, international Seigniorage revenues, pure capital investment revenue and the power of home currency on other country' financial assets, will come to the home country of international currency. If we take the inflation into account, the economical benefit will become more and more.Apart from the economical benefit said above, the international currency's home country will get economical and political benefit on its international prestige. The home country of international currency, Such as dollar in Bretton Woods System, will exert substantial influence on other countries via its home monetary policy.To the country, whose home money is not international currency, have to own other country's currency to finish international economic activity. For example, china has to hold a large number of dollars to cope with international economical payment for long time. They have to confront with the currency risk as its home country appreciated, which have bad influence on its export. Besides, in order to have foreign exchange reserves, it means large number of outflow of home resource. Last but not most important, it will have negative effect on its home monetary policy for.From the contrast above, the home currency's Internationalization will get large benefit, which is much influential for the large country such as China. With Chinas becoming much stronger, RMB's Internationalization gets more and more scholars attention. Most of them have one ideal that RMB will become international currency on the long time. However, they have different answer about when and how to become international currency.On contrast to three international currency's Internationalization, they all depend on their strong economical strength. However, their financial foundation varies from one to one. For example, our neighboring country, Japans financial foundation is not good contrast to American and European Union. With Chinas opening up, Capital and Financial Account become more and more open to the other countries. Since 1996, China has achieved the convertibility of Renminbi(RMB) current item transactions and capital item's opening up is also being pushed forward orderly. Divided into 43 capital transaction item,20-30 items's free transaction gets unrestricted now in China. RMB's capital item gets partly convertible.With the gradual liberalization of capital movement, more and more capital enter china's capital market. Direct investment has already gotten unrestricted now. Since July 2003, the inflow of foreign portfolio gets liberalized gradually by the means of QFII. Combined with offshore financial business valet operated by commercial bank on customers'behalf in April 2006, QDII got launched formally. Personal direct investment to foreign country also got liberalized in August 2007. on analysis of china's economical and financial condition, China have met the conditions to promote the RMB's Internationalization. From the point of currency's measure of value, medium of circulation and medium of payment, China can promote RMB's trade settlement and make it be one settlement currency. Then, combined with its financial opening up, RMB really becomes on financial investment currency. At last, RMB become reserve currency and absolute international currency.By view of the popular theism'of settlement currency choice, strong economical strength, large scale of international trade and export commodity's diversity are three essential conditions for one currency's being international currency. Thirty years after opening up and reform, the economical strength rise up to rank three. In the early year of 2009, the export scale of china rise up to rank two. Besides, the export structure becomes more and more diversity, of which high-tech products stand high proposition. from the view of currency Internationalization conditions, we can see that China has met the conditions to promote RMB's Internationalization. Besides, the export district diversity have supply good conditions for RMB to RMB trade settlement. Firstly, we can promote it in East Asia. And then, the district can to spread to Africa. At last, we can take into practice into euro union and America.When RMB can be used into international settlement, combined with domestic financial reform, RMB turn into investment currency and reserve currency. In order to promote RMB settlement, several measures must be down. In the first, the government should push forward and encourage it. Besides, we can improve the Bilateral Swap with other countries which have large scale of trade with China. Of course, building RMB security market and offshore financial business is also very important for it. As one important complement, the government should broaden RMB credit on export and import. RMB overseas support will also be helpful to its international trade settlement. |
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