Potential of Renminbi to emerge as international reserve currency.

This paper investigates the potential of Renminbi to become an international reserve currency in the future. It is beneficial as it reduces the ever-growing balance payments deficit pressure on a single reserve currency issuer and provides an alternative currency to the US dollar and Euro. With the...

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Bibliographic Details
Main Authors: Mak, Li Yi., Ng, Yao Yee., Pao, Beverly Ying Yan.
Other Authors: Nanyang Business School
Format: Final Year Project
Language:English
Published: 2013
Subjects:
Online Access:http://hdl.handle.net/10356/51367
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Institution: Nanyang Technological University
Language: English
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Summary:This paper investigates the potential of Renminbi to become an international reserve currency in the future. It is beneficial as it reduces the ever-growing balance payments deficit pressure on a single reserve currency issuer and provides an alternative currency to the US dollar and Euro. With the People’s Republic of China (PRC) increasing economic size and expanding influence, Renminbi is a natural choice to emerge as a new international currency. However, this is dependent on the Chinese government’s effort to push for a more convertible Renminbi and development of efficient financial system. Our simulations suggest that the Renminbi will assume a more prominent international role, accounting for around 7-43% of international reserves by 2035.