Wednesday, March 30, 2016

The Global RMB

So far China has done nothing to suggest that its ideas on global monetary order would be very different from the existing system. China has, after all, done well out of the current arrangements, unrepresentative though the governance may be. China's initiatives have been generally compatible and helpful. For example, central bank swap facilities have proven to be the most effective form of response to foreign-exchange crises, and the Chinese central bank has now put in place more swap arrangements than the US Fed; some 28 active swaps, compared with the Fed's five standing liquidity facilities. Thus, as China finds its new and more important place in the international monetary order through the globalisation of the RMB, 'schism is hardly inevitable'.

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