imf高级宏观经济学研修班课件ct1405mmf-l07curren.pptVIP

Currency Internationalization Presenter Tao Wu CTP Training Program Macroeconomic Management and Financial Sector Issues CT14.05 Content Outline Definition of currency internationalization Objectives and benefits of currency internationalization Costs of currency internationalization Evolution of an international currency RMB Internationalization 2 Definition of Currency Internationalization 3 MMF Definition of International Currency A national currency is regarded “internationalized” if it plays the role of money outside the country where it is issued. Medium of exchange; Unit of account; Store of value; Method of payment. For an operational definition, it may be useful to identify qualifications for an international currency. Capital account convertibility; no restrictions on currency trading, spot or forward; Little or no restrictions on foreigners’ access to domestic financial markets; Large volume of trade and financial assets from the originating country; The issuer has the bargaining power to denominate trade in its currency; Well developed financial market with a large variety of risk-hedging instruments; breadth and liquidity; Stability of value: long-run price stability (low inflation) and low exchange variability. 4 Capital Account Convertibility Capital account convertibility may be a precondition, but it does not automatically lead to currency internationalization (CI). IMF defines the term “convertible” as “freely usable for the settlements of international transactions”. Unless the currency is widely used in international transactions, it does not function as a global unit of exchange. The degree of a currency’s actual usage is the most critical criterion: Its share in the denomination of international trade and financial assets; Foreign holdings of the currency as international reserves. By this standard, even Japanese yen is yet a fully fledged international currency. 5 International Reserves (% of Total) 6 Source: IMF Annual Reports Qualification