RMB's SDR inclusion revs up globalization
- By He Yafei
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Future Moves
China is expected to advance sustainable economic development, perfect its financial system, enhance the depth of the capital market and stabilize global anticipation of the RMB, so making the RMB a major global reserve currency.
First, RMB internationalization will be beefed up. China will continue to be proactive in international financial governance and financial system reforms. Based on the reforms smoothly carried out to liberalize the capital account and RMB exchange rate, the RMB's global march must speed up in order to become a freely convertible currency as early as possible. By the end of 2020, the use of RMB for cross-border transactions should make up 35 percent of the use of both of its own and foreign currencies in China's cross-border transactions. The figure in 2014 was 23.8 percent.
Meanwhile, China's major-country diplomacy plays its role effectively. New international financial institutions, including the Asian Infrastructure Investment Bank, the BRICS New Development Bank and the Silk Road Fund, provide platforms to build new structures within a comprehensive opening-up, and to increase China's influence and voice in multilateral economic and financial organizations. China is encouraged to speak out boldly, to uphold justice, and to reflect the demands of developing countries in order to establish a fairer, more equitable and reasonable system of international economic and financial governance. The country, at the same time, will be involved ever more deeply in the global economic system.
Next, China endeavors to expand the scale and depth of the financial market, build up a modern financial system, and advance the level and efficiency of services that finance provides for a substantial economy. It adheres to the principle of giving equal importance to investment and financing in the financial market, while developing a multi-level capital market and increasing the proportion of direct financing. The stock market system will be further improved, the proportion of equity financing increased, and the marketization of resources allocation realized. In addition, the country needs to unify regulations in its bond market to promote efficiency and liquidity. Expanding two-way opening-up of the financial market will heighten the level of internationalization.
To better serve a substantial economy, technological facets of the financial system must be perfected to conform to the national strategy of innovation-driven development. The development of green finance will boost the country's economic transformation and progress in a more environment-friendly way. The country also upholds inclusive finance, and vows to give more financial support to small and micro businesses, as well as to the three agriculture-related issues of agriculture, farmers, and rural areas.
Last but not least, China will build a financial supervision system according to international standards, and stick to the bottom line of avoiding systematic and regional financial risks. New financial modes like shadow banking and Internet finance are emerging against the backdrop of deepening economic reform and the "Internet Plus" strategy, which requires higher levels of management and safety. Financial situations at home and abroad since 2008 imply that the specter of another global financial crisis constantly lurks. Therefore, a perfected financial supervision system is of great importance to China. The central bank should strengthen its supervision over systematically important financial institutions to form a reliable safeguarding system while building China into a major financial power.
He Yafei is deputy director of the Overseas Chinese Affairs Office of the State Council and former vice minister of foreign affairs.
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