The nexus of BRI and internationalization of renminbi (RMB)

Abstract

Since 2009, the Chinese government has committed itself to encourage Renminbi (RMB) internationalization. China has introduced various direct steps supporting the RMB internationalization, including the open capital market in Hugangtong, the growth of the offshore RMB, the launch of the Cross-Border Interbank Payment System (CIPS). The reform of the exchange rate structure for the RMB, developing crude oil futures. Incorporating the RMB into the SDR, BRI, and the establishment of AIIB contribute to further internationalization of the RMB. The BRI provides an opportunity, on the one hand, that the RMB becomes a foreign trade currency and strengthens the RMB’s position as an international currency. China must encourage RMB internationalization, including turning cross-border RMB trade as a payment currency, promoting RMB internationalization with ODI, enhancing the RMB exchange rate process, developing domestic financial system and financial infrastructure, and warning to expand capital account and develop offshore RMB.