Will the renminbi emerge as an international reserve currency?

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever-growing balance-of-payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn-out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond - sharing from 3 to 12 per cent of international reserves by 2035.

Original languageEnglish
Pages (from-to)42-62
Number of pages21
JournalWorld Economy
Volume37
Issue number1
DOIs
Publication statusPublished - 2014 Jan 1

Fingerprint

currency reserve
currency
convertibility
balance of payments
China
foreign exchange
financial system
world economy
deficit
economic growth
simulation
International reserves
Renminbi
Reserve currency
International currency

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics
  • Political Science and International Relations

Cite this

Will the renminbi emerge as an international reserve currency? / Lee, Jong-Wha.

In: World Economy, Vol. 37, No. 1, 01.01.2014, p. 42-62.

Research output: Contribution to journalArticle

@article{93a78305e1bb4afd9786b76aa9295162,
title = "Will the renminbi emerge as an international reserve currency?",
abstract = "The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever-growing balance-of-payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn-out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond - sharing from 3 to 12 per cent of international reserves by 2035.",
author = "Jong-Wha Lee",
year = "2014",
month = "1",
day = "1",
doi = "10.1111/twec.12092",
language = "English",
volume = "37",
pages = "42--62",
journal = "World Economy",
issn = "0378-5920",
publisher = "Wiley-Blackwell",
number = "1",

}

TY - JOUR

T1 - Will the renminbi emerge as an international reserve currency?

AU - Lee, Jong-Wha

PY - 2014/1/1

Y1 - 2014/1/1

N2 - The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever-growing balance-of-payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn-out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond - sharing from 3 to 12 per cent of international reserves by 2035.

AB - The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever-growing balance-of-payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn-out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond - sharing from 3 to 12 per cent of international reserves by 2035.

UR - http://www.scopus.com/inward/record.url?scp=84892486300&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84892486300&partnerID=8YFLogxK

U2 - 10.1111/twec.12092

DO - 10.1111/twec.12092

M3 - Article

AN - SCOPUS:84892486300

VL - 37

SP - 42

EP - 62

JO - World Economy

JF - World Economy

SN - 0378-5920

IS - 1

ER -