Comment: Is The International Market True Love For RMB?

< p > now, more and more foreign investors are willing to hold RMB. If you ask them why they hold RMB, it is estimated that nine out of ten will answer because China is the second largest economy in the world because of China's national strength.

However, this is just like ten to nine of marriages will be called "true love", so I have to question: < /p >

< p > 1.. If China does not have more than 3 trillion US dollars in foreign exchange reserves, will a href= "//www.sjfzxm.com/news/index_c.asp" > international investors < /a > also hold RMB?

< p > 2.. If there is not a huge arbitrage space and a stable appreciation expectation, will international investors hold RMB? /p

< p > if the answer is negative, then the international reputation of < a href= "//www.sjfzxm.com/news/index_c.asp" > RMB > /a "is basically based on the international reputation of the US dollar; if the answer is two, then the rapid internationalization of RMB will only be short-lived in the past few years, and the reversal of the trend may have serious consequences.

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No P doubt that the US dollar is a real international reserve currency, and no one even doubts that the international position of the US dollar is supported by US national strength and advanced system.

Most of us do not want to hold us dollars. I think most of them are not due to the expectation of the appreciation of the US dollar (of course there is trust in the appreciation potential of US dollar assets). The root cause is more security factor, because private property in the United States is "sacred and inviolable".

However, in a lack of property rights awareness, and even lack of a perfect system to mediate disputes over property rights, we can only rely on state authority to build a country with debt credibility. I think this sense of security is hard to obtain.

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< p > above are divorced from the actual analysis. The so-called "adversity is true." only when a crisis breaks out is the real time to test the true love of a currency by international investors.

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< p > < a href= > //www.sjfzxm.com/news/index_c.asp > European debt crisis < /a > led to capital outflow in China in 2012. The RMB exchange rate has been stable at 6.3 level for a period of time, or even slightly depreciated. Although this can not fully explain that RMB appreciation or appreciation is expected to be the key driving factor for RMB internationalization.

However, when the market for frozen bonds was frozen, the offshore RMB exchange rate against the offshore RMB exchange rate would be greatly reduced, which may prove that international investors' love for the renminbi is not "true love".

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< p > lack of "true love" usually does not have any good ending.

If the rapid internationalization of RMB over the past few years is mainly driven by arbitrage in the market, once the trend reverses, the impact on China's economy may be immense.

Because the internationalization of RMB has complicated the debt relationship between China and overseas markets. If a crisis, especially the crisis caused by China, provoked foreign investors to sell offshore renminbi assets, the consequences can be imagined.

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< p > this article does not want to negate the strategic significance of promoting RMB internationalization. It only wishes to emphasize potential risks. After all, although the status of the international currency enjoys enormous benefits, it also needs to take corresponding risks.

Recently, the two-way fluctuation of RMB exchange rate in China may be an important test of RMB internationalization process.

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