Chinese Yuan Rmb Can Become Global Reserve Currency?

In: Business and Management

Submitted By TaoJessy
Words 1523
Pages 7
Market Liberalization… with Chinese Characteristics:
Can the Chinese Yuan become a Global Reserve Currency?

Abstract

China’s economy is growing ever larger, but is that enough to get the Chinese Renminbi (more commonly known as Yuan) to be accepted as a global market currency? This paper will look into the liberalization, but with Chinese characteristics, of five determining factors in becoming a country who’s currency is a global reserve currency. These factors are as follows: economic size, macroeconomic policies, flexible exchange rates, financial market development, and finally having an open capital account, and will ultimately prove the China is not quite the rising economic power some believe it to be (citation, 2012).
Market Liberalization… with Chinese Characteristics
In China, it is currently the year of the dragon, a symbol of good fortune and sign of intense power. With this symbol of fortune and power many Chinese are hoping for a year of economic prosperity, especially for the growth of the Renminbi, or more commonly known as the Yuan. In recent years, China has maintained that it’s “special” economy is pursuing a “market economy, but with Chinese characteristics”. Some of these characteristics include encouraging more of an international use of the currency, while being famous for their inflexibility with exchange rates, and not fully opening up the economy to the free flow of capital. However, the Yuan’s acceptance as a reserve currency will be based on China’s economic size, macroeconomic policies, flexible exchange rates, financial market development, and finally having an open capital account. It seems that with time, it is inevitable that China’s Yuan will one day become a global reserve currency. Depending on the development of these five criteria, China’s currency may become a global reserve currency sooner than…...

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