Potential of Renminbi to emerge as international reserve currency.

• 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: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/51367
• Institution: Nanyang Technological University

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.