Welcome!

News Feed Item

RMB to Be Key International Reserve Currency Within a Decade -- Centre for International Finance and Regulation

Major Changes Forecast for Chinese Bond and Equity Markets and Global Financial Flows

SYDNEY, AUSTRALIA -- (Marketwired) -- 03/25/14 -- The Centre for International Finance and Regulation (CIFR) today released a comprehensive academic research report into the internationalisation of the renminbi (RMB) and its implications for global financial markets.

Authored by Dr. Kathleen Walsh and Mr. Geoff Weir, both research fellows from CIFR, and Professor Barry Eichengreen from University of California Berkeley, the 125-page report includes in-depth analysis of the Chinese financial landscape as well as interviews with more than 100 Chinese companies. It concludes that in the near-to-medium term capital controls will be largely or completely lifted; borrowing and lending rates will be market-determined; the exchange rate will be market-determined and the RMB will become a significant international reserve asset.

Key insights from the report include:

  • RMB likely to become a major trade invoicing and settlement currency with implications for trade financing; FX markets and derivatives markets.
  • Chinese equity market likely to become the largest in the world within a decade, with a forecast market capitalisation of around US$30 trillion or almost 25% of projected world equity market capitalisation compared to a projected US$22 trillion (18%) for the US.
  • Chinese bond markets likely to become the second biggest in the world.
  • Capital inflows will surge as China becomes a core component of benchmark indices, as will capital outflows as Chinese domestic portfolios diversify.
  • RMB to be a significant global reserve currency, with RMB-denominated government securities likely to become the main alternative 'safe asset' to US Treasuries. This dual reserve asset future is projected to have a stabilising influence on global markets.

Geoff Weir said there would be winners and losers from the internationalisation of the renminbi:

"For example, markets that are already centres of offshore RMB expertise will experience strong growth in RMB-related financial flows and activity. On the flip side, as Chinese financial assets become major components of global equity and fixed income benchmark indices, they will do so at the expense of the assets of other countries -- in particular developed economies. Currencies and asset classes such as the Australian dollar and Australian resource stocks, which are used as 'proxy' trades to express views on China, will lose popularity."

Kathleen Walsh said that RMB trade invoicing offers many benefits for parties on both sides, but some constraints in both China and its trading partners identified in the survey they have conducted will need to be overcome.

"The costs of hedging foreign exchange risks would appear to be significantly higher in China than in many offshore financial centres, reflecting the greater liquidity and interbank connections offshore," she said. "This suggests that both parties can potentially benefit from RMB trade invoicing, but many markets have constraints that will need to be removed in order to reap the full benefits of greater RMB trade invoicing."

The report will be launched today at a Symposium in Sydney, where CIFR executives and research fellows will be joined by RMB experts from the Bank of China; the Reserve Bank of Australia; the Australian Treasury; Schrodersb; ANZ; the Australian Financial Markets Association; the Australian National University; the University of Auckland and the Chinese Academy of Social Sciences.

Company Logo
http://release.media-outreach.com/release.php/Images/1668

About the authors:
Geoff Weir
began his career in The Australian Treasury and the Reserve Bank of Australia. In 1991 he moved to the financial sector, working in London and Paris as a hedge fund strategist for Bankers Trust International and later for Moore Capital. In 1996 Geoff returned to Sydney to take up a position as Head of Global Fixed Income at BT Funds Management. In 2002 he moved to JBWere (now Goldman Sachs JBWere) where he worked as strategist on a global macro hedge fund. Geoff was appointed to the position of Director, Australian Financial Centre Forum, in September 2008. He has worked as a Research Fellow at CIFR since late 2012. Geoff has a First Class Honours degree in economics from Macquarie University in Sydney and a Master of Philosophy degree from New College, Oxford.

Dr Kathleen Walsh holds a PhD in Finance from the AGSM and a First Class Honours degree in Finance from Curtin University, WA. She has held senior finance academic positions at the University of New South Wales and the University of Sydney and currently holds an appointment as an Associate Professor of Finance at the Australian National University. Dr Walsh is well published in leading domestic and international journals and has been awarded several research prizes including the E. Yetton prize for best paper in the Australian Journal of Management. Dr Walsh has also been the recipient of several research grants including a large ARC linkage grant.

Barry Eichengreen is the George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he has taught since 1987. He is a Research Associate of the National Bureau of Economic Research (Cambridge, Massachusetts) and Research Fellow of the Centre for Economic Policy Research (London, England). In 1997-98 he was Senior Policy Advisor at the International Monetary Fund. He is a fellow of the American Academy of Arts and Sciences (class of 1997). Professor Eichengreen is the convener of the Bellagio Group of academics and economic officials and chair of the Academic Advisory Committee of the Peterson Institute of International Economics. He has held Guggenheim and Fulbright Fellowships and has been a fellow of the Center for Advanced Study in the Behavioral Sciences (Palo Alto) and the Institute for Advanced Study (Berlin). He is a regular monthly columnist for Project Syndicate. His books include Labor in the Era of Globalization, co-edited with Clair Brown and Michael Reich, Emerging Giants: China and India in the World Economy, co-edited with Poonam Gupta and Ranjiv Kumar, Fostering Monetary & Financial Cooperation in East Asia, co-edited with Duck-Koo Chung, What G20 Leaders Must Do to Stabilize Our Economy and Fix the Financial System, co-edited with Richard Baldwin, (e-book 2008), Rescuing Our Jobs and Savings: What G7/8 Leaders Can Do to Solve the Global Credit Crisis, co-edited with Richard Baldwin, (e-book 2008), Globalizing Capital: A History of the International Monetary System, Second Edition (2008), The European Economy since 1945: Coordinated Capitalism and Beyond (updated paperback edition) (2008), Bond Markets in Latin America: On the Verge of a Big Bang?, co-edited with Eduardo Borensztein, Kevin Cowan, and Ugo Panizza (2008), and China, Asia, and the New World Economy, co-edited with Charles Wyplosz and Yung Chul Park (2008).He was awarded the Economic History Association's Jonathan R.T. Hughes Prize for Excellence in Teaching in 2002 and the University of California at Berkeley Social Science Division's Distinguished Teaching Award in 2004. He is also the recipient of a doctor honoris causa from the American University in Paris.

About CIFR:
The Centre for International Finance and Regulation (CIFR) brings together leading Australian universities, research centres and financial organisations to assist the financial sector, government and regulators to meet emerging challenges and opportunities locally, regionally and internationally.

Supported by a consortium, including the Commonwealth and NSW Governments, CIFR provides a strategic link between academia, financial regulators, policy makers and industry. The Centre pursues a substantial agenda across three domains: world class research, policy input and engagement with industry.

Contact:
Kristin Westlake
The Continuum Partner
Email: Email Contact
Tel: +61 416 219 358

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
DevOps has often been described in terms of CAMS: Culture, Automation, Measuring, Sharing. While we’ve seen a lot of focus on the “A” and even on the “M”, there are very few examples of why the “C" is equally important in the DevOps equation. In her session at @DevOps Summit, Lori MacVittie, of F5 Networks, explored HTTP/1 and HTTP/2 along with Microservices to illustrate why a collaborative culture between Dev, Ops, and the Network is critical to ensuring success.
Interoute has announced the integration of its Global Cloud Infrastructure platform with Rancher Labs’ container management platform, Rancher. This approach enables enterprises to accelerate their digital transformation and infrastructure investments. Matthew Finnie, Interoute CTO commented “Enterprises developing and building apps in the cloud and those on a path to Digital Transformation need Digital ICT Infrastructure that allows them to build, test and deploy faster than ever before. The int...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great dea...
SYS-CON Events announced today that Technologic Systems Inc., an embedded systems solutions company, will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Technologic Systems is an embedded systems company with headquarters in Fountain Hills, Arizona. They have been in business for 32 years, helping more than 8,000 OEM customers and building over a hundred COTS products that have never been discontinued. Technologic Systems’ pr...
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Deep learning has been very successful in social sciences and specially areas where there is a lot of data. Trading is another field that can be viewed as social science with a lot of data. With the advent of Deep Learning and Big Data technologies for efficient computation, we are finally able to use the same methods in investment management as we would in face recognition or in making chat-bots. In his session at 20th Cloud Expo, Gaurav Chakravorty, co-founder and Head of Strategy Development ...
SYS-CON Events announced today that Telecom Reseller has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
What if you could build a web application that could support true web-scale traffic without having to ever provision or manage a single server? Sounds magical, and it is! In his session at 20th Cloud Expo, Chris Munns, Senior Developer Advocate for Serverless Applications at Amazon Web Services, will show how to build a serverless website that scales automatically using services like AWS Lambda, Amazon API Gateway, and Amazon S3. We will review several frameworks that can help you build serverle...
SYS-CON Events announced today that Loom Systems will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2015, Loom Systems delivers an advanced AI solution to predict and prevent problems in the digital business. Loom stands alone in the industry as an AI analysis platform requiring no prior math knowledge from operators, leveraging the existing staff to succeed in the digital era. With offices in S...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...
SYS-CON Events announced today that T-Mobile will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. As America's Un-carrier, T-Mobile US, Inc., is redefining the way consumers and businesses buy wireless services through leading product and service innovation. The Company's advanced nationwide 4G LTE network delivers outstanding wireless experiences to 67.4 million customers who are unwilling to compromise on ...