List of Figures xi
List of Tables xiii
Foreword xv
Acknowledgements xvii
About the Author xix
Chapter 1 Internationalizing the RMB 1
The Conditions for Becoming a Global Currency 2
Business and RMB 10
RMB-Product Markets 11
Reserve Currency 14
The Emerging Monetary Order 16
Chapter 2 The Rise and Fall of Currencies - Historical Lessons for the RMB 21
Risks in International Monetary System Transitions 23
The Role of Eurodollars in the 2008 Global Financial Crisis 26
2008: Year Zero for a New International Monetary System? 27
Conditions for Currency Internationalization: Market Demand and Institutional Supply 30
Institutional Inertia and Disruptive Events 35
Offshore Currencies and International Liquidity 36
Current International Reactions to the RMB's Rise 41
RMB Internationalization 44
Conclusion 46
References 47
Chapter 3 Economic and Institutional Foundations for the Rise of the RMB 49
Economic Foundation 49
Surprises 58
New Growth Engines 60
Capital-Account Liberalization 62
Institutional Quality 68
Conclusion 80
References 81
Chapter 4 Can the Chinese Bond Market Support a Potential Global Renminbi? 83
Overview of the Chinese Bond Market 84
Chinese Treasury Market in International Perspective 91
A Dilemma and a Bold Public-Debt Consolidation Scheme 98
Government-Backed Deb Securities 103
Conclusion 107
References 107
Chapter 5 Waxing and Waning of the Chinese Stock and Banking Markets 109
Chinese Stock Market: Growing Despite Immaturity Flaws 109
A Massive Chinese Banking Market Opening 125
Conclusion 133
References 133
Chapter 6 Rising FX Turnover of the RMB 135
Could the Market Accommodate More Global Currencies? 135
What Determines the FX Liquidity of the RMB? 138
Potential for Rising RMB Turnover by Market Segment 143
Conclusion 149
References 150
Chapter 7 A Spreading Global Network for RMB Trade 151
The RMB's International Position 152
Hong Kong Still the Dominant Offshore RMB Center 155
More Offshore Centers Catch Up to Spread a Global Network 158
Prospects for Offshore RMB Centers 164
Conclusion 169
References 169
Chapter 8 Brief Examples of Business Use of the Internationalizing RMB 171
Samsung's Use of RMB to Reduce Foreign Exchange Conversion Costs 171
Alstom's Use of RMB as Corporate Treasury Currency 173
Chinese Importers' Profit Incentives from Use of RMB Trade Settlement: Changhong 175
Conclusion 178
Reference 178
Chapter 9 The RMB as a Reserve Currency 178
Global Perspectives 179
Scale of RMB Holdings 181
Drivers of Change 182
Exchanging RMB in a Crisis 190
Onshore and Offshore Access 190
Offshore Alternatives 191
Conservatives Change Course 192
Roadblocks Ahead? 193
RMB Inclusion in SDR 195
Capital-Account Reform 197
Conclusion 198
References 199
Chapter 10 Concluding Reflections 201
Appendix A China RMB Financial Statistics and Forecasts by Other Institutions 207
Glossary 213
Index 215