Cool Thinking on RMB Internationalization, with a Consideration of the Direction of International Monetary System Reform
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| Title | Cool Thinking on RMB Internationalization, with a Consideration of the Direction of International Monetary System Reform
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| Author | Wang Guogang |
| Organization | Institute of Finance and Banking, Chinese Academy of Social Sciences |
| Email | wgg3806@sina.com |
| Key Words | RMB; Internationalization; Cool Thinking |
| Abstract | Promoting RMB's internationalization and making it one of main reserve currencies has been advanced as a reform plan of international monetary system. To guard countries' right to choose international currency, international monetary system with single core international currency should not be an option of the reform. Based on the principle of seigniorage tax and Gresham's Law, RMB internationalization is a process of interests transfer from China to other countries. In that respect, three adverse changes will take place in China's balance of payment during the process: switch from trade surplus to trade deficit, switch from persistent high saving rate to persistent low saving rate, and switch from creditor nation to debtor nation. Against the background, RMB internationalization is rather an international responsibility for China to contribute to the reform of international monetary system and stability of international economic order. The implication of "cool thinking" here is to remind authorities concerned of the adverse effects of RMB internationalization on China's economic development and to avoid the policy that makes RMB internationalization an item in national development strategy and pushes forward it with administrative mechanism. |
| Serial Number | WP450 |
| Time | 2013-06-24 |
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