The internationalization of the Renminbi (RMB) is a long-term project that has evolved gradually through a series of policy initiatives, infrastructure developments, and external shocks over the past few decades. This report aims to answer three sets of questions:
- What key push and pull factors explain the increasing internationalization of the Chinese RMB and how has the global monetary and financial context developed?
- How does this increase relate to China’s wider monetary and financial policies? What infrastructure is being put in place? What scenarios can be envisaged?
- What are key consequences of this increase for the Dutch/European economic security and the Euro area monetary sovereignty?
The research was implemented under the purview of the LeidenAsiaCentre and commissioned by the China Knowledge Network of the Government of the Netherlands. Conclusions and opinions are solely those of the authors.
The main conclusion of the report is that the international use of the RMB has seen only modest progress in the past 15 years, but that China has substantially expanded the institutional infrastructure that underpins this internationalization. Internationalization could accelerate in several ways: (i) through policy changes that render the RMB a more attractive currency to invest, fund or trade in; (ii) by increased international demand for the RMB as an alterative to the USD; (iii) as a means to provide a safety net for international transactions in a more adversarial world. With changing economic interests and growing international tensions, China’s authorities are now at a crossroad with respect to internationalization of the RMB.
