China capital and currency

WASHINGTON, April 26 (Reuters) - If China wants its yuan to become a globally used currency, Beijing would need to have open capital markets and full currency convertibility, the International Monetary Fund's No. 2 official said on Tuesday. IMF First Deputy Managing Director Gita Gopinath, speaking about the global lender's new institutional view on capital flow measures at a Peterson Institute for International Economics event, said history has shown that reserve currencies widely used in global trade transactions, such as the dollar and the British pound, do not have capital restrictions, as China does. "If a country is aspiring to be a global currency, then in that case, you would need to have, you know, basically fully and freely mobile capital, full capital account liberalization, full convertibility of exchange rate, which is not the case right now in China," Gopinath said in response to a question on China's capital restrictions. The IMF on March 30 updated its institutional guidance on capital controls to allow for the use of pre-emptive measures to reduce the risks of abrupt capital outflows causing financial crises or deep recessions. Under the Gopinath said some countries with fixed exchange rates might have more reason to employ capital flow measures pre-emptively because they would have fewer tools to counteract sudden capital outflows. But she cautioned against using the capital flow measures to achieve certain policy goals that are better handled with domest...

Yuan vs. Renminbi: An Overview Chinese currency is a hot topic these days for many reasons. Not only does it define the state of one of the world's biggest economic superpowers, but it is also central to one of the most debated issues involving China today—its perceived mercantilist policy of artificial undervaluation of its currency against the U.S. dollar to give its exports an unfair price advantage. • The Chinese Yuan (CNY) and Renminbi (RMB) are interchangeable terms for China's currency. • The Renminbi(RMB) is the official name of China's currency. The principal unit of RMB is called the Chinese Yuan (CNY). • CNY is the official • The yuan character is also used in the names of other currencies, such as the New Taiwan Dollar, Hong Kong Dollar, Singapore Dollar, or the Macanese Pacata. • The renminbi was added to the list of the top-five most-used currencies, making it part of the IMF’s Special Drawing Rights basket. During the period of the command economy, the value of the RMB was tightly controlled, with one yuan pegged at 2.46 yuan to the U.S. dollar until 1971. As the Chinese economy began opening to the world market, the PBOC allowed the yuan to trade on international markets, although the floating exchange rate was still tightly controlled. CNY is the official currency abbreviation for the Chinese Yuan under the However, RMB is often used as an unofficial abbreviation. In addition, due to China's cross-border currency controls, the Chinese Yuan may trade for a ...

EXECUTIVE SUMMARY Of the currencies of the world’s six largest economies, China’s renminbi is the only one that is not a reserve currency. In this study, we consider three related but distinct aspects of the renminbi’s role in the global monetary system: • Internationalization: its use in denominating and settling cross-border trade and financial transactions, that is, its use as an international medium of exchange. • Capital account convertibility: the country’s level of restrictions on inflows and outflows of financial capital. A fully open capital account has no restrictions. • Reserve currency: whether the renminbi is held by foreign central banks as protection against balance of payments crises. China’s capital account has become more open as controls on both inflows and outflows have been relaxed. China is promoting the international use of its currency by: • Permitting the settlement of trade transactions with the renminbi. • Easing restrictions on cross-border remittances of the renminbi for settlement. • Allowing the issuance of renminbi-denominated bonds in Hong Kong and by foreigners in the Mainland. • Permitting selected banks to offer offshore renminbi deposit accounts. • Setting up local currency bilateral swap lines with other central banks. These steps are gaining traction, although they are still modest in scale. A big advantage for China is that Hong Kong provides an effective platform for launching these measures in an experimental manner without full ca...

• The Chinese yuan renminbi is the currency used in the People's Republic of China. • Yuan is the actual unit of currency while renminbi is the name of the currency itself. • Yuans are divided into 10 jiao and one jiao is divided into 10 fen. • Banknotes are printed in one, two, five, 10, 20, 50, and 100 yuan denominations, as well as one, two, and five jiao denominations. Understanding the Chinese Yuan Renminbi (CNY) The Chinese yuan renminbi is the official currency of mainland China. As noted above, the term yuan refers to a single unit of the currency while the term renminbi refers to the actual name of the currency itself. The yuan is abbreviated as CNY while the renminbi is abbreviated as RMB. The latter was introduced to the country by the Communist People's Republic of China at the time of its founding in 1949. You can tap into the Chinese market by investing in American depositary receipts or by purchasing China A-shares. Special Considerations As mentioned above, the terms yuan and renminbi are commonly used interchangeably or together in some parts of the world, so it's no surprise that their use often confuses investors. The term yuan renminbi, though, is a lot like the terms The pound sterling is the name of the British currency itself while pounds are a denomination of the pound sterling. You use pounds to purchase goods and services, not pounds sterling or sterling. Following this example, it's important to remember that you can refer to the currency in gene...

The jury is still out as to whether or not China presents an untapped resource which rewards the brave investor, or a monetary mousetrap which allows capital to flow in, but never out. Whatever the opinion, China is simply too big to ignore. Were it any other country, China’s history of rapid economic growth over the past two decades would have prompted an influx of foreign investment. Emerging economies tend to lure in foreign capital with the promise of continued growth or just a quick buck. Importantly, China’s one-party-policy grants it unprecedented control over domestic markets. This should embolden investors who can thus more safely finance their exploits without the risk of unprecedented swings in the market, but this Above all, it would appear that it is not monetary concerns that cause investors to shy away from Chinese markets but China’s capital controls China has imposed increasingly strict regulations governing the flow of money in and out of the country. The laws that apply to Chinese nationals are markedly different from those that apply to foreigners and foreign-owned businesses. China’s capital controls have formed the backbone of its economic development over the past decade. China has geared its monetary policy around restricting the outflow of capital and currency. This forces domestic households and businesses to reinvest their money into the Chinese economy instead of foreign enterprises. China relaxed its capital control schemes in the early 2000s. ...

China’s currency has considerable economic potential, but, as a reserve currency, the yuan (also called the renminbi) remains far behind the US dollar. Political concerns help explain such underperformance. In particular, the centralization of political power during the Xi Jinping era has curtailed the yuan’s economic appeal. Political and economic reforms are the currency’s only path upward. China’s economy is the second largest in the world. Yet, the yuan, China’s currency, remains a minor player in the global economy. Although 60 percent of worldwide official foreign exchange reserves (financial assets held by central banks) are in US dollars, just about Why is China’s currency underperforming the dollar to this degree? Answering that question requires understanding the factors that undergird the dollar’s dominance. When considering how to allocate assets, central bankers consider a number of risks, of which three are central: (1) the chance that a borrower will default on their debt (credit risk), (2) the possibility that the income derived from an investment in one currency will fall relative to potential investments in alternative currencies (currency risk), and (3) the danger that an asset cannot be sold and converted into cash with sufficient speed to address a financial need (liquidity risk). On credit risk, the US government has never defaulted on its debt. Its bonds, referred to as US Treasuries, are widely regarded as the safest store of value in the world. Thi...