On the internationalization of the Renminbi

The issue of internationalisation of the Renminbi, broadly defined as the process of allowing the Chinese currency as a currency for international payments, settlements, investments, reserves, has been extensively debated and discussed among academics, politicians, regulators and journalists. Many of them are excited about the possibility of the Renminbi soon becoming the globally accepted means of financial transactions as there is a need for more currencies to be involved in the international monetary system as it will strengthen the system as a whole. However, some people apparently have been sceptical about that. They think that the internationalisation of the Renminbi will be unlikely to happen because the currency still do not have critical features to be a global reserve currency such as free convertibility, market oriented interest rate mechanism and freely accessible capital markets and they doubted that the Chinese government would ease grip on the capital markets and monetary system.