RMB SDR entry is Longmen has to turn or back?
xinlangcaijing· 2016-10-28 23:27:50
/ sina finance leaders column (WeChat public kopleader) columnist Shen Jianguang
I think the challenge facing the current process of internationalization of the RMB should not make China financial market open back, instead, the RMB smoothly into the basket, the RMB exchange rate fluctuations should overcome panic, grasp the opportunity to expand the floating range of the RMB exchange rate and vigorously promote the market-oriented reform of the domestic financial market and opening up.
SDR &lrm Longmen has joined the RMB is; or back?
in October 1st this year, the yuan was officially incorporated into the SDR basket. As I mentioned earlier in the article, the RMB for the first time included in the SDR basket, the proportion is beyond the yen and sterling, ranked third, the full expression of the IMF for five years China financial reform certainly, and the RMB basket for the global monetary system adjustment is the milepost event, which indicates that the proportion of the world RMB as a reserve currency will be further enhance the future. From this point of view, the RMB into the basket for the internationalization of the RMB target is actually a leap in Longmen.
however, since last year, IMF announced its decision to join the SDR since last year, there was a super expected, because the Fed opened the historic interest rate and RMB exchange rate reform of RMB devaluation twice, an unprecedented increase pressure. Under this background, the capital outflow trend, foreign exchange reserves from 2014 highs has dropped by about $800 billion, then had to take a stable exchange rate means that, even through the pick up part of the capital controls to reverse the expected. Therefore, questioned believe that such initiatives, with the goal of internationalization of the RMB which also means that the goal of internationalization of the RMB will face is a manifestation of inversion.
how to look at the historical significance of RMB into the basket? For the RMB internationalization target what is Longmen has or back?
review of the past, in early 2011, the author puts forward the basic concept of RMB internationalization path, namely RMB in 2015 is expected to achieve capital account convertibility, in 2020 to become an international reserve currency. Around this goal, the author put forward the need to coordinate the four pillar of reform, including the interest rate market, the exchange rate market, capital projects open, offshore RMB market construction. At the same time, in the author's opinion, the relationship between the above reform should be complementary and coordinated.
from the perspective of monetary authorities, in 2009 the people's Bank of China Governor Zhou Xiaochuan Chinese published the article "on the reform of the international monetary system thinking", the earliest of the imagination of the internationalization of rmb. In this paper, clearly pointed out the inherent vulnerabilities and systemic risks in the global financial crisis reflects the dollar dominated international monetary system, namely the Triffin Dilemma still exists, the reserve currency country cannot provide liquidity at the same time to ensure the stability of the currency in the world, explains the importance to break the dilemma of International monetary system dominated by the dollar and improve SDR status.
in this context, the next six years, the central bank from practice around the four pillars of the construction, accelerate the process of internationalization of the rmb. For example, the interest rate market, the gradual liberalization of deposit interest rate cap, treasury bond futures; exchange rate, increase the range of $811 last year, and the intermediate exchange rate reform of RMB at the end of last year, with reference to a basket of currencies; capital account liberalization, Shanghai and Hong Kong through the opening, the inter-bank bond market and other aspects of the construction of the offshore market; London, Hongkong, Singapore, New York and other places, RMB products increasingly rich.
however, the relationship between the four pillars of the internationalization of the RMB reform, as early as the beginning of 2013 there has been a heated debate. One view is to represent the central behavior, that is, the process of internationalization of the RMB a number of reforms need to be coordinated, there is no order. I also agree with this path; another is the Academy of Social Sciences scholar as the representative, that the capital account liberalization and internationalization of the RMB exchange rate after the conditions are not ripe, and the market-oriented interest rate reform, in order to consider the liberalization of the capital account, the main concern from the capital project in financial market impact, and stressed that the current number of seemingly RMB international demand, in the condition of non equilibrium exchange rate, in fact largely arbitrage demand. The main contradiction between the two sides of
is the relationship between capital account liberalization and financial risk. In my opinion, the Chinese Academy of Social Sciences, the first exchange rate market interest rates, suggestions of capital account opening is too ideal, after all, in the capital project control, demand of real exchange market is not formed, the price is not the equilibrium exchange rate, therefore, the reform should not be the premise of capital project open.
, of course, to prevent the risk of capital flows may bring the project, the central bank has said that a sufficient confidence. For example, the Central Bank Deputy Governor Yi Gang has said that China will do have the management of convertible, especially for anti-terrorism, anti money laundering, anti tax havens and other aspects, China has a strict monitoring. Different from other countries in the international balance of payments statistical sampling statistics, China's international balance of payments statistics to achieve full coverage, which is to do a good job in the management of free convertibility laid the foundation.
in addition, the central bank monetary policy Secretary Li Bo also mentioned, with capital outflows triggered the crisis concerns can be macro Prudential Management of capital flows and short-term debt; for example, short-term speculative capital management including Tobin tax, capital gains tax, interest reserve, stamp tax. Treatment of external debt, foreign exchange positions can be limited, time management, risk ratio management and information disclosure and other measures. Even, temporary foreign exchange control measures in emergency situations. All of these are recognized by IMF.
from this perspective, the author thinks that, in recent years, the Fed rate hike leads to increased capital outflows, and panic spread, the central bank to stabilize the exchange rate, and even temporary regulation take part of capital controls belongs to the special moment, embodies the spirit of active policy, the internationalization of the RMB is not backwards. And from the effect of view, although the timing is not favorable exchange reform, stable exchange rate means also have a loss in the short term, but in the long run, help to stabilize confidence, and contribute to the promotion of Japan after the reform.
at this point, the international attitude is positive. In this year's G20 Chinese leading Hangzhou peak on the construction of effective global economic and financial governance structure, continue to improve on the capital flow analysis, and monitoring of capital flows volatility risk management agreement; at the same time, IMF in October 1st this year the RMB officially joined the the SDR basket welcomed all the international community for China prevention the financial measures of risk recognition.
so, I think the challenge facing the current process of internationalization of the RMB should not make China financial market open back, instead, the RMB smoothly into the basket, the RMB exchange rate fluctuations should overcome panic, grasp the opportunity to expand the RMB exchange rate floating range, and vigorously promote the domestic market-oriented reforms and the opening up of financial markets, for example accelerate the opening of Sino US investment agreement and the domestic bond market. At the same time to ensure the stability of the economic fundamentals, to prevent the real estate bubble, as well as to accelerate the reform of state-owned enterprises. The only way to make RMB successful entry into the SDR will not fall into a situation, but Longmen has become China, into the international financial system and even lead the propeller.
(original FT Chinese network)
(the author: Ph.D., chief economist at Mizuho Securities Asia director general manager of the company. Visiting professor, School of economics, Fudan University, China new supply economics forum of 50 members.)