China’s stable and improving economic outlook is the main reason, experts say

2022-08-06 0 By

Beijing, April 1 (reporter Yang Liuqing) The International Monetary Fund (IMF) on March 31 local time released “official foreign exchange reserve currency composition (COFER)” data showed that in the fourth quarter of 2021, the PROPORTION of RMB in COFER rose again, hitting a new high since the IMF reported the data in the fourth quarter of 2016.The renminbi’s share of global foreign exchange reserves rose to 2.79% in the fourth quarter of 2021 from 2.66% in the third quarter of 2021, ranking it fifth globally.It is also the highest level since the IMF began reporting reserve assets in yuan in 2016.At the same time, the scale of renminbi foreign exchange reserves is also rising.In the fourth quarter of 2021, total renminbi foreign exchange reserves rose to $336.1 billion from $321.15 billion in the third quarter of 2021, ACCORDING to IMF data.”The proportion of global foreign exchange reserves is an important indicator to measure the status of a country’s currency among global currencies.”Xu Feibiao, deputy director of the BRICS and G20 Research Center at the China Institutes of Contemporary International Relations, said in an interview with Cnr.cn that the increase in the proportion of RMB in global foreign exchange reserves means that the authorities of various countries are willing to hold financial wealth in the form of RMB, indicating that these countries have high confidence in the YUAN.”The increase in the proportion of RMB foreign reserves means greater acceptance of the RMB by the international community.”Yu Xiang, a visiting researcher at the Center for Strategic and Security Studies of Tsinghua University and a senior researcher at the Research Institute of China Construction Bank, told CNr.cn that there are two main reasons for the increase in the proportion of RMB in global foreign exchange reserves. One is that China has been deeply involved in the international economy in recent years, and China’s foreign trade and investment have become more active and important.The other is that the sound and stable prospects of China’s economy have become more attractive to foreign investors, who are more willing to hold the renminbi as a hedge against other risks and to share the dividends of China’s development.(CFP) Xu Feibiao said in an interview that the underlying reasons for the increase in the proportion of RMB in global foreign reserves are that China’s economic growth prospects are good, China’s financial market is generally stable, and China’s investment prospects are more favorable and predictable, which makes the market willing to hold RMB as a reserve asset.At the same time, the orderly opening up of China’s financial market is an important reason for the increase in the proportion of RMB in global foreign reserves. Countries have access to purchase or hold RMB assets with relatively high interest rates and predictable returns.”This is also of benchmark significance,” Said Xu Feibiao, noting that the willingness of all countries’ officials to hold RMB as their foreign exchange reserves will boost the confidence of enterprises and other market players in RMB, thus further increasing the demand and status of RMB in the global currency market.In Yu Xiang’s opinion, with the further expansion of China’s economic size and the further improvement of China’s international influence, the international community’s willingness to hold RMB and related assets is expected to increase, and the internationalization of RMB is expected to continue to advance.At present, the call for the diversification of the international monetary system is increasingly high, and the international monetary system is accelerating into a turbulent adjustment period, which undoubtedly brings new opportunities to the internationalization of RMB.At the same time, the internationalization of RMB will also put forward higher requirements for RMB issuance, management and risk control.Xu Feibiao believes that in the future, the promotion of RMB internationalization still faces some challenges.First, the financial market should be opened up. Through integration and connection with overseas markets, the inflow and outflow of capital should be further liberalized, so that overseas governments, enterprises and residents can hold RMB and purchase RMB assets more conveniently.”This technical reform is being pushed forward, but obviously it cannot be accomplished overnight, and many supporting measures are needed.”Second, how to make the RMB accepted by governments, international organizations, enterprises and residents of all countries. After the technical aspects of RMB internationalization are completed, people should also be willing to hold the RMB. This is a gradual process, and there is still a lot of work to be done in this regard.Declaration: The copyright of this article belongs to the original author, if there is a source error or infringement of your legitimate rights and interests, you can contact us through the mailbox, we will promptly deal with.Email address: jpbl@jp.jiupainews.com