Renminbi

With an increasing number of countries and groupings being open to making trade settlements in currencies other than the US dollar, de-dollarisation has gained some momentum and this may also aid China’s efforts for RMB internationalisation. But China may have no intention of letting the RMB replace the US dollar. In that context, would a new “BRICS currency” be better fit for purpose?

In response to former US President Donald Trump’s recent scare about China trying to “displace the US dollar as the number one currency throughout the world”, academic Han Heyuan says that a certain equilibrium is maintained by the US suffering a trade deficit but safeguarding dollar hegemony. If the US wants to bring manufacturing back to the US, it may not be able to export dollars the way it used to, and cannot hope for the dominance of the US dollar to hold.

An Asian Monetary Fund was first mooted by Japan during the Asian Financial Crisis in the late 1990s, but did not quite take off then. Now, with Malaysian Prime Minister Anwar Ibrahim resurfacing the proposal during his recent trip to China, is the prospect of an AMF more likely today than it was 26 years ago?

Rather than the old “forced friendship” marked by “warm politics, cold economics”, China and Russia’s relationship has evolved to a new phase powered by strong internal dynamics manifesting political and economic warmth.

After making headway with French President Emmanual Macron last week, China is set to further its economic cooperation with Brazil’s President Luiz Inácio Lula da Silva, notably with the decision to use their local currencies for cross-border trade instead of the US dollar. While there is still a long way to go for RMB internationalisation, China has certainly upped its game.

The RMB is now one of the most actively traded currencies in the world and is set to gain further traction globally this year, as the People’s Bank of China implements the government’s strategy to boost the currency’s use overseas, challenging the dominance of the US dollar in the long term.

NUS academic Xu Le explains why China's project to internationalise the RMB still has much room to grow. In that regard, the ASEAN countries could play a role, given their desire to be less reliant on the US dollar.

Peking University PhD student Xiong Lan believes that as US-China tensions ratchet up from competition to confrontation, it is likely that the process of internationalising the renminbi (RMB) will be accelerated. The next ten years will be crucial, if China is to reach targets such as for the RMB to exceed 10% market share of international currencies by 2029 and account for 30% of global reserves in the long run. What obstacles stand in the way?