The Internationalisation Of The Renminbi And China's Capital Account Liberalization

The discussion of RMB internationalization existed for many years. Recently, theintroduced policy has promoted the process of RMB internationalization. The inherentweaknesses of the international monetary system had been exposed by the internationalfinancial crisis occurred on September2008. Because of the largest foreign exchangereserve, China paid heavy price in this crisis. Due to this problem, it is necessary for usto promote the process of RMB internationalization. In the meanwhile, to fulfillChina’s own development needs, and with the strong desire of other countries, capitalaccount openness will also be inevitable trend in our country. The paper aims topromote the development of RMB internationalization and capital account openness atthe same time; explore their relationship, analyze the realistic basis and potential risks.Firstly, this paper introduces the theory and the relationship of RMBinternationalization and capital account openness. It is believed that there are no directcause and effect relation between them. Properly capital account openness willpromote the RMB internationalization. Secondly, it analyzes the reality of China, andfinds the defects in the process of RMB internationalization and capital accountopenness. Thirdly, the paper summarizes the current situation of RMBinternationalization and points out the potential risk in economic development. Finally,this paper brings the process of Yen internationalization and its capital accountopenness into consideration; gives recommendation to RMB international and capitalaccount openness. It is hoped that the conclusion of this paper could promote thein-depth development of RMB internationalization and capital account openness.