The Role of the Hong Kong Financial Market in the Process of Internationalizing the RMB

Abstract

The RMB’s process of internationalization began to accelerate when the global financial crisis broke out, which resulted in a radical shift within the international monetary system and a necessity for the rebalancing of the global economy. Because the financial market in China has yet to be fully developed, interest and exchange rates are yet to be liberalized, and it is difficult to open the capital account within a short time, the process of internationalizing the RMB will be different from that of other sovereign currencies. For this reason, the internationalization of the RMB has encountered the following special circumstances: the internationalization of the RMB “began with trade, but is not able to end with trade;” and while the internationalization of the RMB requires the full convertibility of the RMB, China is not able to immediately open the capital account to do so.