|John McCormick, Chairman of RBS Asia Pacific|
allowing all capital account items to be settled freely in CNY both ways in and out of China; lifting all quotas and streamlining the application and approval processes; andThis is a simplification of course as the last step in particular is huge, involves many different areas, and the definition of an international currency goes far beyond this description. Logically, it would be reasonable to expect China to make the CNY fully convertible before embarking on the ultimate goal of internationalising the currency. But China appears to have put the horse before the cart by creating an offshore market to promote the currencys use in international trade and investments first. And this offshore trade has taken the lead over the onshore market. Again, the authorities clearly have a timeframe in mind. Chinas new leadership faces a number of problems. The countrys economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound. But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.
increasing the use of CNY for international trade and investments.
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