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Renminbi Internationalization and China's Financial Development Model

A CGS/IIGG Working Paper

Author: Robert N. McCauley, Senior Adviser, Monetary and Economic Department, Bank for International Settlements

Renminbi Internationalization and China's Financial Development Model - renminbi-internationalization-and-chinas-financial-development-model

Publisher Council on Foreign Relations Press

Release Date November 2011

24 pages


Internationalization was a spontaneous outcome of the marketplace for the rest of the world’s major currencies, but China is breaking with history by making it official policy to steer the renminbi on a path toward reserve currency status. However, this managed internationalization occurs at a time when China’s financial development is still in a transitional phase featuring capital controls and other constraints on credit growth and allocation.  In this Center for Geoeconomic Studies Working Paper, produced in association with CFR’s International Institutions and Global Governance program, Robert McCauley explores the policy challenges facing Chinese authorities as their pursuit of an internationalized renminbi threatens to undermine the effectiveness of their domestic financial market controls.

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Robert N. McCauley serves as the senior adviser in the Monetary and Economic Department of the Bank for International Settlements (BIS) in Basel. His recent work on Asia has included analyses of capital flows, regional financial integration, bond and foreign exchange markets, effective exchange rates, foreign currency bank deposits, monetary policy, and foreign banks’ domestic currency operations.

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