Dan Steinbock — The Internationalisation of the Renminbi

In the past half a decade, the RMB has achieved dramatic progress in commodities, trade, investment and sovereign reserves. It is increasingly central to commodity trading.

The RMB’s catch-up with the Japanese yen and the British pound will take longer – and even longer to gain parity with the dollar and the euro, which still represent 45% and 28% of international payments, respectively.

Nevertheless, the RMB’s role as a major reserve currency is now a matter of time. In the short-term, the transition means increasing market volatility. In the medium-term, it has potential to support China’s rebalancing and thus growth prospects globally.

The RMB will be the first emerging-economy currency that will join the sovereign reserves. In that role, it will pave way to other major emerging-economy currencies in the future.

Economonitor
The Internationalisation of the Renminbi
Dan Steinbock | Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore)