人民币国家化成本与收益英文文献综述

人民币国家化成本与收益英文文献综述 河北经贸大学期末论文 文 献 综 述 Research on the Benefits and Costs of RMB Regionalization 学生姓名 贺晓璐 论文课程 学术英语 课程教师 张润 专业名称 金融专硕 学 号 201301380019 学 期 2013-2014 (一) Abstract With the increase of economic strength in China, The internationalization of the RMB has become the focus of attention at home and abroad. Many scholars have conducted in-depth analysis of the internationalization of RMB. In this paper, combing and analysis of the income and risk of the internationalization of RMB on the existing literature at home and abroad, So that we could correctly understand the benefits and costs of RMB internationalization. In order to realize the internationalization of RMB , we should to minimize the possible cost and maximize the profit. Keywords: The internationalization of RMB, Benefits , costs Research on the Benefits and Costs of RMB Regionalization The analysis of the costs and benefits of RMB regionalization will determine how positively the government will react to regionalization of the currency and what policy choices they will make. 1. The benefits (1) Chinn and Frankel (2005) argued that monetary internationalization has four benefits: Bring convenience to the residents of the country, Bring more business for domestic banking and Finance, Seigniorage and The advantage of political rights. (2) In August 2012, Schroders issued a précis of the first stage of a report we had commissioned on the internationalization of the renminbi, conducted by Dr. Yuning Gao of Cambridge University. Here we briefly to look at the most important installment of his research: costs and benefits of internationalization and the reform processes needed to allow it to occur. ? Potential seigniorage The greatest benefit accruing from internationalization of the currency is the potential income from seigniorage. Regionalization of RMB is actually the exchange of paper money for real resources. Not only may this open a new channel for the flow of funds for China, but it will also improve China?s status and influence in international affairs, especially in Southeast Asia. The seigniorage revenue resulting from the outflow of RMB can be both calculated and predicted. However cohen(1971) argue that the seigniorage revenue of the International currency issuing country depends on it?s international monopoly. If the country is in the monopoly position, Net seigniorage revenue would be very considerable. If there are other international monetary competition, while net income will be reduced correspondingly. Cohen gave an empirical test on pound net seigniorage revenue during the period of 1965-1969. He found the British obtained zero on net seigniorage revenue from sterling in the internationalization of the currency. Papaioannou and Portes(2008) estimate that by 2020 the euro area annual international seigniorage is0.13% of GDP to 0.44%. Their study showed that the currency internationalization, Seigniorage althoughthe absolute amount is large, but relatively speaking, income is not important. ? Enhancing regional economic cooperation Dr. Yuning Gao think that the regionalization of RMB will benefit economic cooperation in Southeast Asia. It will reduce transaction costs and exchange rate risks, thereby increasing the profitability of the ASEAN 10 + 1 free trade area and quickening economic integration pace. The regionalization of RMB is a spontaneous process that is not the result of systematic and coordinated cooperation. It will give a firm basis for further progress in cooperation, reduce the cost of regional harmonization and increase the speed of integration. Moreover it will bring into full play China?s role in the process of economic cooperation in SoutheastAsia. Extensive circulation of RMB in Hong Kong, Macao and Taiwan specifically will increase trade within “the Greater China” and bring the same benefits of integration as mentioned above. (3) Zhang yuyan and zhang jingchun(2008) argue that monetary benefits also include the ability to influence monetary policy and get the power of International monetary market pricing. This is conducive to the maintenance of a favorable currency issuing country financial system. (4) One of the important role of currency internationalization is to reduce the spread of the crisis and the degree of risk exposure. Cook and Devereux(2006) studied the foreign currency pricing function in 1997 Asian financial crisis, In East Asia, the lack of international currency exacerbated the spread of the crisis. Goldberg and Tille(2008) constructed a core periphery model,all trade between countries using the central currency, The model shows that: even the periphery and center scale national trade is very small, but the center currency's international status can be added around the country to foreign monetary policy dependence, also increase the risk of peripheral countries. They think it is the portrayal of East Asia area. (5) Zheng Muqing (1995) believe that RMB internationalization will promote ouroverseas investment , strengthen our international investmentposition, make China obtain huge overseas investment income, and contributes to the development of China's Multi-National Corporation. 2. The costs On RMB internationalization cost, not much research done by scholars, but there are also discussed. as with any process of currency integration, regionalization of RMB also means certain risks. (1) The traditional “Triffin Dilemma” As with any other currency, regionalization of RMB will create problems with providing sufficient international liquidity while maintaining exchange rate stability. China must provide sufficient outflows of RMB in order to maintain liquidity in Southeast Asia. For the most part the outflow of RMB at present is the consequence of China?s trade deficit with Indonesia, Malaysia, Thailand, Mongolia and China?s Taiwan. However, if the RMB is to become a regional currency, maintaining price stability and balance of payments will be quite important for ensuring its good reputation. Therefore when China experiences a trade deficit, the deficit has to be covered by a capital account surplus so that the equilibrium of balance of payments can be maintained, the external value of RMB remains stable and the status of RMB as an international currency can be consolidated. (2) The effectiveness of monetary policy could be influenced The formulation and implementation of monetary policy will be subject to sudden currency inflows and changes in money demand. This will challenge the independence of China?s monetary policy. As an international currency, international capital flows will influence the interest rate, exchange rates and price levels. This therefore requires the Chinese monetary policy authority to strengthen its macro- economic management ability and make the microeconomy more flexible. (3) RMB will, after its regionalization, assume responsibility for regional financial stability For the foreseeable future, the internationalization of RMB is mainly restricted to SoutheastAsia and therefore the most important externalities of China?s macro economic policy decisions will be in Asia. This makes harmonization with the macro- economic policies of other countries in the region a necessity. In the event that speculation in the region threatens to undermine economic stability, China must assume the role appropriate for a country of great size and act as a lender of last resort. (4)Below we have a look other scholars viewpoint Zhong Wei (2002) argued that if Chinese to promoting the yuan as an Asiapivot currency to meet the financial opportunities and challenges of globalization of capital, so the relevant RMB macro financial policy will no longer is the national economic policy independent but the comprehensive consideration of the other countries in the region the financial needs of economic development, a regional policy colors, lost some independencemonetary policy. HeHuigang (2007) think ofRMB internationalization has confidence cost,namely monetary internationalization process to strengthen faith "cost of appreciation" and maintain the hold confidence "promise cost", and the policydeviation cost (domestic spillover effect makes the domestic monetary policy is not only a very small part or role in the domestic economic variables, monetary the policy did not reach the final goal, the predetermined andfeedback effect abroad and make foreign policy will affect the domestic, two effects also play a role in the monetary policy to deviate from the expected goaland even failure). Huang Tingting (2009) from Song Fangxiu and Li Qingyun (2006) point of view, on the assumption that the renminbi is fully convertible and capital free flow conditions, emphasized the RMB internationalization reverse risk. That the yuan as a stable international currency depends on the confidence and expectations, confidence and expectations with forward and reverse self reinforcing double tendency. If for some reason caused confidence drops andpessimistic expectations, reverse strengthening effect, will exaggerate thecurrency fluctuations, cause of risk reversal of RMB internationalization 3. Policy The creation of the „dim sum? bond market in 2007, whereby debt denominated in renminbi is issued offshore (in Hong Kong) by both domestic and overseas corporates, was a positive development in the liberalization process. Though in its early stages this was dominated (uncommonly) by Chinese issuers, after McDonalds became the first non-Chinese company to fund themselves this way in 2010 more multinationals have engaged this market and we would expect to see this pattern continue. Similarly, the Qualified Foreign Institutional Investor (QFII) scheme, launched in 2003, and the Renminbi Qualified Foreign Institutional Investors (RQFII), launched in 2011, allowing overseas institutional investors to invest in Chinese financial markets (in the latter case using renminbi from the offshore market) are significant reforms to ease the process of investing in China. Despite these welcome developments over the past decade, the opening of the Chinese capital account and subsequent internationalization of the renminbi is still in its infancy. Though it has become easier for capital to flow in, the ability of Chinese capital to flow outwards (e.g. for the Chinese populous to buy foreign assets) remains restricted. In September 2012, the main five financial regulators in China issued their latest five-year plan for reform of the industry. This espoused the principles of relaxing controls on capital flows, enhancing the degree of convertibility of inward portfolio investment to open the domestic capital market, enlarging the outward portfolio investment and advancing the convertibility of the renminbi. In early 2012 a report from the People?s Bank of China (PBoC) outlined a blueprint for the process of liberalizing the capital account and internationalizing the renminbi, which they suggested would occur in three stages. In the near-term (1–3 years), the control of direct investment into the economy needs to be loosened, as well as encouraging overseas direct investment by Chinese corporates and making better use of the foreign exchange assets held by the official sector. Over the medium-term (3–5 years), reforms should be enacted both to loosen the control over commercial credit and to improve the „cycle channel? of offshore renminbi back into mainland China, which currently still requires regulatory approval on a case by case basis. Over the longer-term (5–10 years), liberalization would involve the opening up of the property, equity and bond markets totally to outside investors. 4.Conclusions Dr. Gao feels that the pace of reform outlined above by the authorities provides a realistic timetable for the future internationalization of the renminbi. He believes that significant changes have already occurred, such as the increasing ability for the renminbi to deviate from its target rate against the dollar, a process which will help make the renminbi more attractive as a reserve currency. Over the next five years, Dr. Gao believes that the RQFII quota will at least double to 500bn yuan (US$80 billion). This expansion will remain the main channel for overseas equity investments in China, with the interbank bond market allowing more investors (not just clearing banks) to hold renminbi assets. He views it as possible that the cap on portfolio investment is entirely removed over this timeframe. As for the offshore renminbi market, this is expected to continue its expansion as a rapid pace, as renminbi liquidity overseas remains rare, and the demand will remain strong. Over the next five years the dim sum bond market could reach up to 1.5 trillion yuan (US$240 billion), approximately 2% of the total onshore bond market. Moreover, it is likely the offshore market (CNH) will dominate the onshore (CNY) market in terms of foreign exchange trading, allowing the renminbi to become a virtually free-floating currency in five years. Over a slightly longer time horizon, Dr.Gao?s research suggests that by 2020 China?s per capita income will have doubled to around US$10, 000, in line with the target set by policymakers at the recent 18th Communist Party conference; and will have the second largest financial market in the world. These financial markets, such as the equity, credit and bond markets, will be freely opened to foreign investors, allowing capital to flow more easily into and out of China. While the development path is likely to be an uneven one, with reform happening more or less slowly to meet other economic goals, it is clear that it is occurring; and will have profound implications for both China and the world. It is difficult to envisage a global economy in ten years in which the renminbi does not play a significant role. References [1] Cohen BJ The benefits and costs of an international currency. [D] 2011 [2] Calvo,Guillermo and Carmcn Reinhart,2002,Fear of Floating. 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