Original title: More than 70 foreign central banks or monetary authorities have included the renminbi in foreign reserves and the road to internationalization of the renminbi is becoming more stable

  The internationalization of the renminbi is in the process of accelerating progress, and more and more countries use the renminbi as their official reserve currency.

  According to the "Renminbi Internationalization Report 2020" recently released by the People's Bank of China, as of December 2019, more than 70 foreign central banks or monetary authorities have included the renminbi in their official foreign reserves. The cross-border use of RMB also maintained rapid growth. From January to December 2019, cross-border use of RMB exceeded 19.67 trillion yuan, a year-on-year increase of 24.1%. The renminbi is currently the fifth largest payment currency in the world, after the US dollar, the euro, the pound sterling and the yen.

New opportunities for RMB internationalization

  In the eyes of Liu Ying, a researcher at Renmin University of China's Chongyang Institute of Finance, the inclusion of the RMB into the Special Drawing Rights Basket (SDR) by the International Monetary Fund in 2016 was a milestone in the process of RMB internationalization.

  Since then, the European Central Bank and many European countries such as Germany, France, Italy, Spain, Belgium and other European countries have listed the RMB as foreign exchange reserves; more than 10 African countries have also used the RMB as an international reserve currency at one time; recently Iran has officially replaced the US dollar with the RMB. And listed the renminbi as the main foreign exchange currency.

  "This is unprecedented in the world, showing that more and more countries trust and recognize China's economic development and the renminbi." Liu Ying told the International Business Daily reporter.

  The impact of the new crown pneumonia epidemic on the global economy is obvious. The epidemic is a big challenge to the internationalization of the RMB, but it also breeds more opportunities.

  Liu Ying analyzed that after the Federal Reserve cut interest rates to zero interest rates twice in rapid succession and restarted the US$700 billion quantitative easing monetary policy, the corresponding currency depreciation will increase. The stability of the RMB is gradually manifesting. When the US dollar is unstable, more and more countries expect to hold the yuan.

  According to the latest report of the Association of Global Interbank Financial Telecommunications (SWIFT), as of July this year, the share of RMB international payments has risen to 1.76%, and the amount of RMB payments has increased by 14.15% compared to the previous month, exceeding the Canadian and Australian dollars in scale. The report also pointed out that the United Kingdom most likes to use RMB for transactions in commercial trade, and the scale of trade transactions accounts for about 5.45%, ranking first among countries in the world.

  Liu Ying said that at this time, the RMB can be more open to the outside world through the domestic financial industry, asset valuation, and the implementation of bonds, including the full liberalization of the quotas for qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII). Wait and seize the opportunity to seek more stable development.

Make the road to RMB internationalization smoother

  Although RMB internationalization is currently at a relatively accelerated stage, it still faces many challenges.

  Xu Hongcai, deputy director of the Economic Policy Committee of the Chinese Policy Research Institute, said in an interview with a reporter from the International Business Daily: "The three major functions of the renminbi as an international currency, combined, currently play a global share of about 3.2%. Below, the dollar is 52%, the euro is 26%, the yen is 4.4%, and the pound is 4.0%. This situation is obviously not commensurate with China’s economic status. There is still much room for improvement in the internationalization of the renminbi.”

  China Zhou Chengjun, director of the Financial Research Institute of the People’s Bank of China, said recently that foreign non-resident investors have a great demand for holding RMB assets. A global RMB foreign exchange trading market should be established so that investors can follow local laws after holding RMB assets. Regulations conduct hedging and foreign exchange transactions in the local foreign exchange market.

  In Liu Ying's view, this is a major breakthrough in the process of RMB internationalization, and it also requires China to further accelerate its opening up and financial reforms. "Under the premise that external and internal risks are controllable, and while the general direction of financial opening up remains unchanged, how to control the speed, intensity, and rhythm of opening up is crucial. This requires not only scientific and technological support, but also It requires artistic control.”

  For this reason, Liu Ying believes that it is necessary to accelerate the construction of a unified, open, competitive and orderly market system, promote the establishment of a factor market system, and realize factor price market decision and flow independence. Order, configuration is efficient and fair. Promote opening up with reform, and promote reform with opening up. Only in this way can the path of RMB internationalization be smoother and more stable.

  Xu Hongcai also put forward a suggestion: “We still need our own hard work to strike iron. The construction of our own financial system is of vital importance. To this end, we must promote structural reforms on the financial supply side, adhere to the positioning of financial services for the real economy, and focus on macro-control, financial institutions, financial markets, Financial products and financial system reforms and innovations are being advanced simultaneously."