Speech Summary Renminbi Internationalisation

The speech discusses the internationalisation of the Chinese currency. It argues that the internationalisation of the RMB could become one of the biggest forces shaping the global financial system over the next decade. It is also likely to have a major effect on how the Chinese economy operates, just as the internationalisation of the Australian dollar had a positive effect on the Australian economy.

The speech outlines some of the benefits to China of having the RMB taking its place as one of the world’s truly global currencies. Next, it turns to the progress of the currency in this regard, observing that while internationalisation is a lengthy and complex process, Chinese authorities have achieved significant progress across many fronts.

On the question of how to build on the progress achieved so far, the speech acknowledges the challenges inherent in this process. It places particular emphasis on two of these challenges in particular. Firstly, it discusses the difficulty of managing the volatility in capital flows that can be associated with a more open capital account. Secondly, it explores the challenge of managing the implications of an internationalised RMB for global markets and investment patterns.

The speech concludes that China is amidst an important transition as it seeks to realise its ambition of having a global currency. It ventures that the effects of this transition could ultimately be as significant as were the effects of China’s ascension to the World Trade Organisation and that they have the potential to provide China and the rest of the world with a win-win outcome.

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