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Internationalizing the Australian Dollar

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Currency Internationalization: Global Experiences and Implications for the Renminbi

Abstract

Asian policymakers combine ongoing or episodic resistance to financial globalization with a keen interest in the potential for their currencies to be used by non-residents. Despite attempts to stave off capital inflows as these mounted in 2006 and early 2007, the authorities of Korea, India and China have all paid attention to the potential for more extensive international use of their currencies. In May 2006, the Korean Ministry of Finance and the Economy (2006) described its acceleration of the schedule to liberalize the won and capital flows as ‘facilitating the internationalization of the won’. In July 2006, the Tarapore Committee of the Reserve Bank of India (2006) devoted several paragraphs to the internationalization of the Indian rupee. In August 2008, the People’s Bank of China created a new unit to analyse the exchange rate of the renminbi and its internationalization. As the papers in this volume attest, Chinese scholars are not waiting for the full liberalization of the Chinese capital account to consider the potential of the renminbi as an international currency.1

Asian policymakers are giving consideration to allowing their currencies to be used by non-residents. If policy allows this and a robust fixed income market provides support, the Australian experience indicates that a currency can internationalize fairly quickly, particularly if it offers a yield pickup.

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Authors
  1. Robert N. McCauley
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Editor information

Wensheng Peng (Head of China Research in Barclays Capital)Chang Shu

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© 2010 Robert N. McCauley

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McCauley, R.N. (2010). Internationalizing the Australian Dollar. In: Peng, W., Shu, C. (eds) Currency Internationalization: Global Experiences and Implications for the Renminbi. Palgrave Macmillan, London. https://doi.org/10.1057/9780230245785_3

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