The Internationalization of RMB: Features of Disequilibrium and Strategy under New Situation

Internationalization of RMB is China's strategy for dealing with U.S dollar risks in the current international monetary system dominated by U.S.dollar.The RMB internationalization pilot program concentrated on cross-border trade settlement in RMB and Hong Kong offshore RMB market development.The process has made some achievements being reflected by the accumulation of RMB trade settlement and the increase of Hong Kong RMB deposit.However,the RMB internationalization has shown obvious features of disequilibrium.For example,RMB used more in import than export,RMB asset business is much less than liability business,and excess RMB bonds supply.Based on theory and stylized facts,the internationalization of RMB based on appreciation expectation is not sustainable.The possibility of big RMB appreciation is declining and the global financial market chaos will impact the demand for RMB seriously.The RMB internationalization is a natural result of a mature market economy.It is a long progress which is driven by market forces.The role of the government is to accommodate the market trend,launch domestic financial reform,and perfect financial market actively.Both the interests of economic agents and the state are involved in RMB internationalization.In the context of global economic instability,China should not take global approach to speed up RMB internationalization,which will cause internal financial instability.One market needs one money.The realistic approach of RMB internationalization is to improve the economic integration between China and its neighboring countries and economies,and to enhance cooperation in trade,investment,and finance.China should take active actions in Asian cooperation,strengthen Asian transaction network,and integrate Asian market.