RMB official of the country to take the first step in the internationalization of open ice-breaking trip
People's Bank of China and the Bank of Korea announced last Friday signed a bilateral currency swap agreement to provide liquidity support to the size of 180,000,000,000 yuan / 38,000,000,000,000 won (about 2,829,000,000 U.S. dollars). This is conducive not only to South Korea to help resolve the face of 10 years of economic downturn, but also for the first time the yuan's official attitude to go out of the country, the extraordinary historical significance. Some experts suggested that despite the internationalization of the yuan still time, but in a timely manner to promote the internationalization of the RMB in East Asia. To provide liquidity support for each other It is learned that China and South Korea signed the size of 180,000,000,000 yuan / 38,000,000,000,000 won (about 2,829,000,000 U.S. dollars) in local currency swap agreement is a two-way exchange of money, the two sides in the size of the above, the national currency as collateral in exchange for equal The other currencies. The agreement is valid for three years, can be extended by mutual agreement. About why these measures, the Chinese central bank official explained, the two sides signed an exchange agreement means that the commitment to a certain amount of the exchange, deepen the crisis in the particular case at any time to start. In particular, the two countries local currency through the exchange of each other can provide short-term liquidity support for the national commercial bank branches in each other to provide financing to facilitate and promote the development of bilateral trade. The role of regional economic stability in the Great This round of financial crisis, Korea has become the devaluation of the largest and fastest-growing foreign exchange reserves, the loss of economies. Since early So far, the depreciation of the won against the U.S. dollar up 32% since October fluctuations in the won is still severe, with January's rise against the U.S. dollar depreciation rate of more than 100 won. Loan-to-off times for the global financial crisis, Premier Wen Jiabao stressed in last Saturday, will further strengthen inter-regional cooperation initiatives between Japan and South Korea in the expansion of bilateral currency swap size. According to data published by the Ministry of Commerce, Japan, South Korea was China's third and fifth largest trading partner, before September's trade volume reached 202,700,000,000 U.S. dollars, 146,220,000,000 U.S. dollars; At the same time, Japan was China's fifth largest export market and largest Import market; South Korea and China is the sixth largest export market and import of the four major markets. Take the first step in the country "The central bank is very clever, that is, on the regional economic and financial stability has played a role, but also the internationalization of the RMB forward a bit." Chinese Academy of Social Sciences Institute of World Economics and Politics pointed out that the researcher Dr. Zhang Bin, to avoid direct U.S. dollars, will be to avoid the dollar. Earlier, Japan and South Korea have also reached 13,000,000,000 U.S. dollars of currency swap agreements, and is expected to be announced on the 13th to expand the size of the exchange to 300 million. Experts pointed out that China, Japan and South Korea's economic and financial exchanges, inter-dependent industries are also very strong, as the crisis of enormous destructive power continue to the present, this region in safeguarding financial stability and promoting regional trade and investment facilitation Have an important role. In Juzhongruoqing between RMB official of the country to take the first step for the internationalization of the dream of wings added. Background By promoting the global financial crisis South Korea's financial crisis is the most affected countries in Asia, devaluation of the won against the dollar this year, about 60% of foreign exchange reserves have fallen rapidly over the past four years fell to a record low of 200,500,000,000 U.S. dollars, only in November on the outflow of 11,700,000,000 U.S. dollars. Earlier, Japan economic data showed that the economic downturn, greater than initial expectations. The recently released by the recent GDP, industrial added value, the import, export and foreign direct investment in November, and other economic data were also hit a new low, the same can not be optimistic about the situation. Former U.S. Treasury Secretary Connolly once said: dollar is our currency, but it is your problem. A financial crisis, saying the interpretation essence reached its peak, all holders of large dollar reserves or a large number of U.S. national debt of all this pain. However, the latest between China and South Korea reached a bilateral currency swap agreements, may become the treatment of pain medicine. The financial crisis, countries in the world to clearly recognize that a single dollar for international currency reserves and as the defect is growing. To reflect on the root causes of the crisis, various countries have put forward to strengthen and expand international supervision of the International Monetary various types of comments and suggestions. Analysis Is a crisis and an opportunity "In the short term, which is designed to provide emergency response to the Bank of Korea, the U.S. needs if they can re-use the RMB to China's central bank to buy." Chinese Academy of Social Sciences Institute of World Economics and Politics, said Dr. Zhang Ming, an effective way to circumvent the two Future currency exchange rate fluctuations against the dollar, the stability of the financial markets. At the same time, China and South Korea in exchange access to capital, the two sides is conducive to export enterprises to avoid exchange rate risk, exchange rate cost savings. "For China, see the crisis, but also the opportunity to see." Financial research institute of China's State Council, said Ba Shusong, deputy director of the United States through a lot of time to carry out the currency crisis of the rescue loan, for the future spread of dollars left Hidden dangers, but also increases the Chinese yuan to promote the internationalization of urgency. In his view, this time with South Korea reached the currency swap, not only for South Korea to provide liquidity, but also the internationalization of the RMB is quite difficult issues in the inter-Juchongruoqing first step. Experts said that the renminbi and won in the exchange between the two countries, so that the yuan for the first time on the international stage is to realize the internationalization of the RMB's a good start. China and South Korea and the central bank said in a statement that the two sides agreed to explore the exchange of currency Dollar reserves into currencies and the possibility of proportion. Prospects RMB internationalization of the time needed However, for many years engaged in the study of foreign exchange expert Tan Yaling pointed out that Sino-South Korea bilateral currency swap between the two countries is based on more trade there is demand for both industries to a certain extent complementary. "The only currency swap yuan will be raised to a high degree of internationalization, too optimistic." Merrill Lynch global foreign exchange strategy team report published by the International Monetary need strong political, military, diplomatic backed up by force. Although China has a population of 1.3 billion is a huge market, stable government, strong military force, but the Chinese capital markets lack the depth and breadth, behind the bond market, the capital has not been completely open, market-oriented interest rate and exchange rate had not been completed, showed that the yuan Not yet do a good job in the internationalization of the pre-prepared. Chinese central bank governor Zhou Xiaochuan said recently that the RMB in the future will certainly serve as a role in the world, and to provide an effective financial services for the offshore financial markets are essential. In the last weekend of the State Council released the details of the revitalization of the financial markets, has made Hong Kong enterprises will be allowed to issue renminbi bonds in Hong Kong. At the same time, the Hong Kong Government has proposed to widen the yuan trading in Hong Kong, the share of settlement. RMB internationalization of the yuan means to transcend national boundaries, in the offshore flow has become internationally recognized pricing, clearing and reserve currency. Impact RMB internationalization of the pros and cons? Chinese Academy of Social Sciences, a major feature of "internationalization strategy of regionalization of RMB," the report pointed out that the RMB internationalization of the positive impact is mainly reflected in four aspects: The first is to enhance China's international status and enhance our influence in the world economy. Second, foreign trade and investment can use the local currency-denominated and settlement, the companies face the risk of exchange rate will also decrease. The third is to further promote the development of China's border trade. The fourth is to issue currency in the world is equivalent to other countries from the collection of seigniorage, which is the basic income without cost. Negative impact on three areas: First, if the local currency's real exchange rate and the emergence of deviation from the nominal exchange rate, or the spot exchange rate, interest rates and expected exchange rates, interest rates appear deviate from, international investors will have to arbitrage opportunities that may arise as the 1997 Asian financial crisis when "Flock effect" on China's economy have a certain impact on financial stability. The second is to increase the difficulty of macro-control. For example, when control of domestic inflation and tightening monetary policy and raise interest rates, the international circulation of the RMB will get opportunity to increase the supply of RMB, thus weakening the effect of the implementation of monetary policy. Third, the increase of RMB cash management and monitoring more difficult. The status quo RMB's rise in Southeast Asia 11 in the second half, against the backdrop of the financial tsunami, Malaysia, Indonesia and so on, through various channels, China expressed the hope that the financial crisis in the desire to be of assistance. However, the Southeast Asian countries in the region calls for the yuan, China should not require it, but in the U.S. in the crisis conscious choice. Malaysia in 2005 to abandon its currency pegged to the dollar in favor of a basket of currencies to implement the floating exchange rate, Malaysia currently has one of the renminbi as part of its foreign exchange reserves. The Philippines is in the signing of the 2006 presidential decree requiring the central bank's foreign exchange reserves as one of the renminbi will be. According to insiders, the Philippines is based on the RMB reserve in the form of currency swap, will be a certain amount of pesos to the Philippines to China in exchange for the same value of the RMB assets and stored in the Bank of China, and to obtain interest. In everyday life, people have more choice to use stored-value the yuan in order to avoid losses brought about by the dollar. Most power companies in China and other foreign personnel is based on wages in U.S. dollars. For a period of time before the trend of strong appreciation of the rupiah, the depreciation of the dollar, the Chinese employees will have the books in U.S. dollars converted into rupiah. Now, many employees are out of wages and repatriated to convert the yuan to avoid risks. It is reported that many wealthy people in Southeast Asia, are optimistic about the prospects for the yuan's appreciation, one after another from their respective channels to collect RMB, but in reality, as a result of China's monetary policy restrictions on overseas banks do not receive their deposits, receive no interest, They put all the money in its coffers at home, still warm and reduction. Advice Dr. Zhang Ming: East Asia to promote the internationalization of RMB China's financial crisis is the negative impact of failure, "crises" with "machine", which is the biggest opportunity to promote the internationalization of the RMB. Should seize the opportunity to trade yuan-denominated as an international tool and, if possible, further international trade payment, settlement has become a tool. Now that there exists an opportunity to promote the appropriate yuan in the gradual internationalization of the East Asian region. In the future, China and other East Asian countries between trade settlement, the choice of renminbi-denominated more likely to be accepted. Because the medium to long term, the trend of depreciation in the dollar, they may choose to start RMB-denominated trading and clearing. As a result, the RMB may become the next to China and some of the small country's foreign exchange reserves. In the long run, the yuan to become a truly internationalized currency, the Chinese government should reduce the foreign exchange market intervention, so that more of the RMB exchange rate determined by the market. But in the short term, this is not a good choice because of China's financial reform has not yet completed, China's banking system is not sound, at this time open to venture capital or venture to control the implementation of free convertibility of RMB , China may face a lot of financial risks.