Journal Article

Internationalization of the renminbi: what it means for the stability and flexibility of the international monetary system

Paul Jenkins and John Zelenbaba

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 28, issue 3, pages 512-531
Published in print January 2012 | ISSN: 0266-903X
Published online September 2012 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grs021
Internationalization of the renminbi: what it means for the stability and flexibility of the international monetary system

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  • Macroeconomic Aspects of International Trade and Finance
  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • Monetary Policy, Central Banking, and the Supply of Money and Credit
  • International Finance

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The central question this paper addresses is whether internationalization of the RMB would be sufficient for the international monetary system (IMS) to provide greater stability and flexibility than today’s IMS. Whether Chinese efforts to internationalize the RMB culminate in the currency achieving reserve status will be for China to realize. The path to reserve currency status, however, is not one that the Chinese can pursue unilaterally. Internationalization entails an interaction between private and public decision-making, and is a function of private-sector confidence as much as public policy. The outcome will be the result of strategic interplay involving public policies across systemically important countries and confidence-building among global savers and investors. The paper argues that international cooperation, especially among reserve currency countries on policy frameworks to achieve the common objectives of economic growth, full employment, price stability, and sustainable fiscal positions will define a coherent and well-functioning IMS.

Keywords: exchange rates; international policy cooperation; international monetary system; renminbi; reserve currency; E52; E61; F31; F33; F42

Journal Article.  9905 words. 

Subjects: Macroeconomic Aspects of International Trade and Finance ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; Monetary Policy, Central Banking, and the Supply of Money and Credit ; International Finance

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