Third time lucky? China’s push to internationalise the renminbi - Executive summary
2 November 2023
To gauge the different speeds at which the renminbi is internationalising across the differ- ent uses of an international currency, we conducted an empirical analysis of the determinants of the cross-border use of the renminbi (Amighini et al, 2023). [...] • F irst, there was a sudden loss of confidence in the value of the US dollar, stemming from massive money creation done by the Federal Reserve to mitigate the consequences of the financial crisis on the US financial system and the economy as a whole. [...] China’s stock market collapse in 2015 and the renminbi devaluation forced China to intervene in the offshore renminbi market to reduce the wedge between the offshore and onshore renminbi exchange at a time when the CNH was considered the best market signal of the future value of the renminbi (Figure 7). [...] But memorandums of understanding have been signed with several central banks, including the Hong Kong Monetary Authority (HKMA), the Bank of Thailand and the Central Bank of the United Arab Emirates, to foster the cross-border use of the digital renminbi in these jurisdictions. [...] Beyond the potential long-term race between the dollar and the renminbi, it is impor- tant to discuss how the renminbi may affect the role of the euro as the second most-traded currency after the dollar.