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RMB Internationalization Faces Limitations

China Review News (CRN) republished a State Information Center (SIC) article on constraints to the process of internationalizing China’s currency, the RMB. The article suggested that this process will be a long one and is constrained by four main limitations: 1) the limitation of the economic development model and structure; 2) the limitation on the degree of the Chinese central bank’s independent decision making power; 3) the limitation of the international financial market’s conditions; 4) the limitation of the cross-border money exchange mechanism. The article expressed the belief that RMB internationalization is an important symbol of China’s movement toward becoming a strong financial power. However, the journey ahead requires heavy work on building a monetary system.

Source: China Review News, May 20, 2011