One Currency, Two Markets: China's Attempt to Internationalize the Renminbi

This book discusses the economic analysis of the future of the international monetary system and the USD, and the rising importance of the RMB. It argues that the dollar standard is unsustainable, China has unique incentives to internationalize its currency, and Hong Kong plays an important role. It applies economic theories to establish that financial development and openness are crucial for RMB internationalization, and greater exchange rate volatility is inevitable. The book predicts that the RMB will be a distant third payment currency after the USD and the euro, but surpassing the Japanese yen in the next decade.

\n Format: Hardback
\n Length: 340 pages
\n Publication date: 08 July 2021
\n Publisher: Cambridge University Press
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This comprehensive book is a must-read for anyone who is intrigued by the economic analysis of the future of the international monetary system, particularly the USD, and the growing significance of the RMB. It highlights the inherent flaws of the dollar standard in the long term, emphasizing China's unique incentives to internationalize its currency. It also sheds light on the crucial role played by Hong Kong in this process. The book delves into the real reasons behind China's desire to internationalize its currency, including leveraging external commitments to drive financial sector reforms (daobi in Chinese). By employing economic theories that are accessible to a broad audience, the book establishes that financial development and openness are essential for the successful internationalization of the RMB. Furthermore, it acknowledges that greater exchange rate volatility is a natural consequence of the open-economy trilemma.

Using the gravity model, the book makes quantitative predictions about the future of the RMB. It suggests that while the RMB is likely to remain a distant third payment currency behind the USD and the euro in the short term, it is poised to surpass the Japanese yen within the next decade. This remarkable transformation reflects the growing influence and importance of China on the global economic stage.

In conclusion, this book offers a valuable perspective on the future of the international monetary system and the RMB. It provides a comprehensive analysis of the factors driving China's currency internationalization, the role of Hong Kong, and the economic implications of this development. Whether you are an economist, business professional, or simply interested in global finance, this book is a must-read for anyone seeking to understand the evolving landscape of international currencies.

\n Weight: 642g\n
Dimension: 161 x 236 x 33 (mm)\n
ISBN-13: 9781108491686\n \n