The Internationalization of RMB: RMB Potential International Status and its Influence on ASEAN

Abstract: The restrictions on China´s capital account is the major restrictive factor for the international use of the RMB. The potential international status of the RMB must be included into the consideration by the monetary authority in designing the pace and form of liberalizing the restrictions, because, in general, the potential international status directly induces the potential benefits and risks. The purpose of this paper is to estimate the potential international status of the RMB. Based on the model, the share of RMB in reserve holding would be about 7.2% in this thesis. In addition, this thesis suggests that RMB has the potential to become a regional anchor currency in Southeast Asia. More specifically, RMB has increasing influences on the exchange rates of ASEAN members.