The 2008 financial crisis and the Renminbi internationalization

Ana Tereza Lopes Marra De Sousa,William Daldegan De Freitas

doi:10.5752/p.1809-6182.2018v15.n2.p33

Ana Tereza Lopes Marra De Sousa, William Daldegan De Freitas

Open Access

https://doi.org/10.5752/p.1809-6182.2018v15.n2.p33

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Abstract

In this work, we investigated the RMB internationalization. We have argued that the 2008 crisis had an important role to change the parameters of RMB internationalization policy. In the early 2000s that policy was pursued as an instrument to accelerate China's financial liberalization, but from the 2008 crisis onwards, the policy also took the responsibility of boosting Chinese foreign trade, facilitating the export of capital and increasing China's economic influence in the world. We have interpreted that the goal of the internationalization policy is not for RMB to replace the Dollar's role, but to route a future in which China's financial and monetary influence in the world will be bigger, making the country less dependent of United States (US) currency and financial system.

Highlights

China’s ascension in international relations in the last decades along with the efforts to internationalize its currency, the Renminbi (RMB), after 2008 financial crisis, has raised questions of whether there is an emergence of new geopolitics in the financial and monetary system5
People’s Bank of China (PBC) launched in 2011 the “Pilot Program of RMB Settlement for Overseas Direct Investment”, which allowed domestic companies that had the approval to make Foreign Direct Investment (FDI) to do so in RMB (PEOPLE’S BANK OF CHINA, 2011)
China’s efforts to internationalize RMB after 2008 financial crisis, as we have shown, should be seen as a means to pursue domestic financial reform, and as a way of boosting foreign trade, facilitating the export of capital and increasing China’s economic influence in the world

Summary

Introduction

China’s ascension in international relations in the last decades along with the efforts to internationalize its currency, the Renminbi (RMB), after 2008 financial crisis, has raised questions of whether there is an emergence of new geopolitics in the financial and monetary system. We have interpreted that the goal of the internationalization policy is not for RMB to replace the Dollar’s role, but to route a future in which China’s financial and monetary influence in the world will be bigger, making the country less dependent of United States (US) currency and financial system. In addition to this introduction, the paper has three more sections. The Chinese interpretation is that the monetary system currently dominated by the Dollar, as the President Hu Jintao said, is a “product of the past,” and the internationalization of the RMB, “a fairly long process”, is directly linked to the update the world needs (BBC NEWS, 2011)

Direct mechanisms for RMB internationalization and results

Findings

Conclusion