RMB - A future international currency?

25 February 2014

Madame Hu Xiaolian, Deputy Governor of the People’s Bank of China (PBOC), is currently visiting New Zealand as the Prime Minister’s China Fellow for 2014. Madame Hu presented to the Victoria Business School and New Zealand Contemporary China Research Centre a discussion of the history, background and prospects of the internationalization of the RMB.

The talk outlined the history of RMB internationalization beginning in the 1980s as the RMB was increasingly used to settle trade in Hong Kong, Macao, Myanmar, Vietnam, Mongolia and Russia. By the 1990s, and especially after WTO accession, China gradually relaxed restrictions on the cash outflows of RMB and by 2005 this had risen to 20,000 per person.

Madame Hu also discussed the development and internationalization of the RMB. She highlighted new opportunities for RMB use as China’s economy changes track from rapid growth to more sustainable growth driven by ongoing economic reform, urbanization and stable macro-economic policy. The prospects for ongoing internationalization were then discussed with reference to four necessary but not sufficient conditions for an international currency.

Read the full public lecture summary here.