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Published byCameron York Modified over 9 years ago
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3 policies for Internationalization of RMB
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major player in international trade and finance continuously growing by 9 to 10 percent per annum for the past three decades the second- largest exporter of manufactur ed goods China
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relatively shielded from the global financial crisis of 2008 expansion of domestic demand rapid rate of bank credit state-owned banks and non-bank companies of the PRC are comparable with their counterparts in the Western world. Background
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Internationalize the RMB to make it as: a medium of exchange unit of accountstore of value Internationalization of RMB For transaction with non-resident
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allow RMB as a trade settlement currency between five mainland cities: Shanghai Guangzou Shenzhen Zhuhai Dongguan some other countries in East and Southeast Asia. 1 st policy
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build the RMB bond market to develop the RMB business in Hong Kong. issuance of RMB denominated bonds by five state-owned banks in 2007. allow commercial banks to issue yuan- dominated bonds in HK 2 nd policy
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the amount of bond issuances in Hong Kong has increased over time 2007 - RMB 10 billion 2008 - RMB 12 billion 2009 - RMB 16 billion
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Extend the currency swap facility Argentina Belarus Russia Pakistan 3 rd policy
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The China-ASEAN Free Trade 1)increase the two-way trade 2)further use of the RMB for trade settlements.
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RMB is not a convertible currency China controls capital flows The core of the Chinese financial market is the underdeveloped state-owned banks Market infrastructure & institutions are not comparable to those in HK and other world- class open financial markets Shortcomings
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