Long road to yuan's global status
By Zhang Fengming |
June 26, 2010, Saturday
|
Print Edition
Print Edition
THE rise of the yuan as a global currency will take a long time, even decades, according to one professor, and more investment instruments are needed to quicken the pace of the currency's internationalization, regulators and industry watchers said yesterday at the Lujiazui Forum 2010 in Shanghai.
"It will take a long time to realize the internationalization of the yuan," said Xie Duo, director of the financial market department of the People's Bank of China at a panel discussion. "We encourage more financial instruments for the yuan."
Xie said China encourages using Hong Kong as an offshore market for the Chinese currency as more companies are allowed to issue yuan-backed bonds or loans.
Overseas or domestic banks in China, including the Bank of Communications, HSBC China and Bank of East Asia, have already issued bonds in Hong Kong to raise capital.
Limited investment options for the yuan make it difficult for the currency to go global, said David Li, a council member of the monetary policy committee of the PBOC, the country's central bank.
Li said it is possible for the yuan to rise as a major global currency like the United States dollar or the euro in 10 to 15 years. He also said the euro will survive the current sovereign debt crisis in Europe.
Richard Portes, a professor at London Business School, said a "serious" flexible exchange regime, a more developed domestic financial market and the rise of private firms in the market are all needed to boost the yuan's wider international acceptance.
"There's a trend of internationalizing the yuan but it takes a very, very long time," Portes said. "We're talking about decades, not years."
China pledged earlier this month to increase the flexibility of the yuan. Its daily trading band is now set at 0.5 percent.
Andy Xie, director of Rosetta Stone Capital Ltd, said China needs to increase the liquidity of the yuan.
"It will take a long time to realize the internationalization of the yuan," said Xie Duo, director of the financial market department of the People's Bank of China at a panel discussion. "We encourage more financial instruments for the yuan."
Xie said China encourages using Hong Kong as an offshore market for the Chinese currency as more companies are allowed to issue yuan-backed bonds or loans.
Overseas or domestic banks in China, including the Bank of Communications, HSBC China and Bank of East Asia, have already issued bonds in Hong Kong to raise capital.
Limited investment options for the yuan make it difficult for the currency to go global, said David Li, a council member of the monetary policy committee of the PBOC, the country's central bank.
Li said it is possible for the yuan to rise as a major global currency like the United States dollar or the euro in 10 to 15 years. He also said the euro will survive the current sovereign debt crisis in Europe.
Richard Portes, a professor at London Business School, said a "serious" flexible exchange regime, a more developed domestic financial market and the rise of private firms in the market are all needed to boost the yuan's wider international acceptance.
"There's a trend of internationalizing the yuan but it takes a very, very long time," Portes said. "We're talking about decades, not years."
China pledged earlier this month to increase the flexibility of the yuan. Its daily trading band is now set at 0.5 percent.
Andy Xie, director of Rosetta Stone Capital Ltd, said China needs to increase the liquidity of the yuan.
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