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Renminbi to become int'l currency

(Xinhua)
Updated: 2006-07-14 09:59
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As the currency of one of the largest economies of the world, the renminbi will become an international currency, and the declared policy of gradually introducing convertibility for capital account items of the balance of payments will help achieve this status, Hong Kong Monetary Authority Chief Executive Joseph Yam said Thursday.

Renminbi to become int'l currency
An employee arranges yuan notes at a branch of the China Minsheng Bank in Nanjing, capital of east China's Jiangsu province. The renminbi will become an international currency, and the declared policy of gradually introducing convertibility for capital account items of the balance of payments will help achieve this status. [Reuters]

In his Viewpoint column published on the authority's website, Yam said the development of renminbi business in Hong Kong will help prepare it for the inevitable process of the renminbi becoming an international currency.

The use of renminbi by mainland residents for consumer spending outside the mainland, particularly in Hong Kong and Macao, and in foreign cities on the mainland's border, is increasing, he added.

"There is a possibility that in the fullness of time, when the mainland develops into one of the major economic powerhouses of the world, the renminbi may even become a reserve currency, just like the U.S. dollar, the euro and to a lesser extent the yen are now, and an anchor currency for the region," Yam said, believing that this process is inevitable.

He said the desirability of Hong Kong serving as the testing ground for the renminbi to get onto the world stage has also become clearer, as has the need for Hong Kong to develop its financial infrastructure to cope with the increasing volume of international financial transactions denominated in the renminbi that will inevitably come.

However, he called for caution over the implications of too rapid financial liberalization for monetary and financial stability on the mainland, particularly in the increasingly complex global financial environment.

"The priority is to get it right, which is important not just to China but also the rest of the world," he said.