1.Internationalization of the Yuan

2. History of the Yuan
The Renminbi is the
official currency of the
Peoples Republic of China, and the Yuan the principle unit of it.
The Renminbi was issued by the Peoples Republic of China in 1949 by the Peoples Bank of China.
3. 4. Dollarization and Internationalization of the Yuan
US dollar has been
the dominant currency. How has this affected the Yuan and its capacity to be an international currency?
5. What does Internationalizing a currency actually mean?
What factors would have to be in place for a currency to be international ? - demand- unit of account- store of value
6. History of Yuan/Dollar Exchange Rates
Yuan has been pegged to the dollar since early 1960s.
Exchange rate first at a rate of 2.46 Yuan/Dollar
July of 2005 revolutionary change in Yuan as it was revalued by being fixed to a basket of currencies.
7. Basket of Currencies
Dominant Currencies:- U.S. Dollar- Japanese Yen- Euro- Korean Won
Secondary Currencies:- Singapore Dollar- British Pound- Australian Dollar- Malaysian Ringgit- Thai Baht
8. Renminbi Exchange Rates
9. Renminbi Exchange Rates cntd.
10. Benefits of Internationalization of the Yuan
Reduce exchange rates (for Chinese firms)
Strengthen competitiveness of Chinese Financial Institutions
Who would these benefit, and how?
11. Current Situation Regarding Yuan
China is 2nd to the US as the worlds largest exporting nation a result of which, the Yuan has developed into a major trading currency for surrounding Asian countries.
Programs to settle trade deals with HK and Macao made
Currency-swap agreements with Asian countries have been made
These factors highlight the importance of the Yuan in regionalization
12. What more does China have to do to be an International Currency?
China would have to offer open transaction venues for foreign dealers
Chinas capital markets would have to develop further
Chinas openness is still restricted this needs to change
Chinas high transaction costs need to be reduced
And most importantly free and full convertibility
13. International Opinion on Internationalization of the Yuan
The U.S. would prefer this event not occur, as they would be at the losing end
To a layperson, travel and retail would be affected, with prices increasing for a large part of the world, and decreasing for China and certain Asian countries.