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Chinese currency becomes more important
人民幣全球重要性增加
2016 is expected to be a huge year for the Chinese yuan. That's according to experts attending the 2015 Renminbi World Conference today in Beijing. The theme of the forum is Engaging With a Further Liberalized China.
China's financial reform has been going full speed ahead. From last November's launch of the Shanghai-Hong Kong Stock Connect, China has witnessed the establishment of the deposit insurance system, a fund recognition with Hong Kong, and the China International Payment System.
Zhu Guangyao, Chinese Deputy Finance Minister said:"Financial reform is an important part of China's 13th five year plan. Over the next five years the government will push forward in opening capital accounts, and getting the rmb included in the International Monetary Fund's Special Drawing Right basket."
The RMB is becoming a more important currency in global investment, trade and financing.
The RMB has overtaken the Japanese Yen to be the fourth most used currency for global payments, up from seventh place at the start of the year. So far over 1100 banks around the world have adopted rmb payments with China, up 21 percent compared with last August. China has huge aspirations for its currency to be accepted as a global reserve currency. Its inclusion in the IMF SDR basket is an important step.
Emmanuel Daniel, Chairman of the Asian Banker said:"When it's included in the SDR, it becomes a viable currency for sovereign around the world to take it on as an asset class. So I think that's the goal China and the world is looking for: a new asset class that come from the developing economy."
The rise of the rmb has made the international financial system more multilateral. Experts say that calls for an organizational change to the institutions like the IMF. It launched a quota and governance reform back in 2010, which attached more importance to emerging economies. But the US has been blocking it.
China wants the package to be approved soon and those issues will be dicussed during the G20 meeting in Turkey from November 15th to 16th. Hans Eichel, co-founder of the G20 summit.
"It was right to reform IMF. But this reform is blocked by US congress. This reform was needed to concede that the emerging markets especially China make more contribution to the world economy. Only if the world financial institutions reflect these situation, they can play a very important role. Otherwise, you can see China is building up its own financial organizations parallel to the bretton wood system," said Hans Eichel, Former German Finance Minister.
These organizations include the Asian Infrastructure Investment Bank and the New Development Bank. The global importance of these new comers in international finance, experts believe, will fully take off in the next few years.
