The globalization of the Renminbi (RMB), or yuan, is an "unstoppable" trend set to make great strides in the next few years, but it will face some speculative risks, Li Ruogu, president of the Export-Import Bank of China, said Monday.
The globalization of the RMB is an inevitable move to ensure the proper direction of the development of the international monetary system, Li, who is also a political advisor, said on the sidelines of the political advisory body's annual session, adding that the present work is to further increase the quantity and frequency of RMB use overseas.
The use of RMB in cross-border trade settlement has been achieved, which is the first step for the globalization of the RMB, Li added.
In his government work report issued last week, Premier Wen Jiabao said China has extended the use of RMB in cross-border trade settlement to the whole country, launched trials for settling overseas direct investment accounts in RMB and begun settling foreign direct investment accounts in RMB.
China will work steadily to make the RMB convertible under capital accounts and expand the use of RMB in cross-border trade and investment, Wen said.
According to statistics from the People's Bank of China, the country's central bank, as of the end of 2011, the total settlement amount of RMB under current accounts reached 2.58 trillion yuan (409.5 billion U.S. dollars). And RMB settlement under capital accounts has also witnessed steady growth.
Li called for expanding the use of RMB abroad by allowing it to circulate more smoothly outside China, reducing the costs for holding yuan and increasing channels for the yuan to go abroad and return home.
In regards to the risks in making the RMB convertible under capital accounts, Li said short-term speculative funds should be controlled and the government needs to establish a system to report and register large transactions in yuan in excess of a certain amount when entering and leaving China.
Li called for more efforts to develop the country's capital market, restrain speculation and promote long-term investment, in a bid to help prevent risks in the globalization of the RMB.