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The Internationalization of the RMB

Opportunities and Pitfalls

An employee prepares to hand over yuan banknotes to a customer at a branch of Bank of China in Hefei, Anhui province, on March 23, 2010. (Stringer Shanghai/Reuters)

BY

  • Takatoshi Ito
    Professor, Graduate School of Economics and Graduate School of Public Policy, University of Tokyo

Overview

China is making swift strides toward internationalizing its currency, the renminbi, but it must be careful when sequencing these changes. Without the proper reforms, wide-open Chinese financial markets would be vulnerable to massive flows of foreign capital that could send China into the throes of financial crisis. In this Center for Geoeconomic Studies Working Paper, produced in association with CFR’s International Institutions and Global Governance program, Professor Takatoshi Ito examines the progress of the renminbi’s march toward international status and evaluates the possible paths forward.t