Until the early years of the 21st century, the Renminbi was not fully convertible and its flow in and out of China faced heavy restrictions. Before 2004, yuan was not allowed outside of China. In 2004, China started to allow border trading in yuan especially in the Southern and Western border. The dim sum bond market generally refers to RMB-denominated bonds issued in Hong Kong. 657 million were issued for the first time by China Development Bank.
In June 2009, China allowed Financial Institutions in Hong Kong to issue dim sum bonds. Formosa bond after mainland banks became eligible. Guangdong province and Hong Kong and Macau. Hong Kong, Macau and ASEAN countries. By 2014, RMB cross-border trade settlement reached RMB 5. On 17 August 2010, PBoC issued policy to allow Central Bank, RMB offshore Clearing Banks and offshore Participating Bank to invest the excess RMB in debt securities, in onshore Inter-bank Bond Market. In the first quarter of 2011, the Chinese Renminbi surpassed the Russian ruble in terms of international trading volume for the first time in history.
In June 2013, United Kingdom became the first G-7 country to set up an official currency swap line with China. As of 2013, the RMB is the 8th most traded currency in the world. 20 billion by the end of 2013. 29 September 2013 with key implementation details announcing in May 2014.
The SFTZ is being used as a test ground for trade, investment and financial reforms, before the roll out to nationwide. PBoC expanded its pilot program for macro prudential management of cross border financing from FTZ to nationwide. The road to the RMB Internationalization is far from complete. First, the size of the home economy must be large relative to others. In this, China is clearly justified.
Second, economic stability in the form of low inflation, small budget deficits and stable growth is also important. China’s record of supportive government policies and macro-economic stability has undoubtedly contributed to the RMB’s appeal in recent years. The bursting of Japan’s bubble in the early 1990s was arguably one of the main reasons why yen internationalization stalled. Third, strong official and institutional support.
This was an important reason for the dollar’s adoption as a global currency after the Second World War, formalised through the Bretton Woods system. Fourth, deep, open and well-regulated capital markets are necessary so the currency can be used to finance trade as well as provide a large enough market in securities for investors. The opening up of China’s onshore capital market will be an important step in the RMB becoming a major investment currency. This is one area where progress has been deliberately slow.
PBoC designates BoC-HK as RMB clearing and settlement bank. 2004, RMB deposits in Hong Kong is allowed. Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas. The investment was initially limited to fixed-income and money market products.
2007, establishment of the Offshore RMB bond market—’dim sum bonds’—which has doubled in size each year since 2008. Cross-Border Trade RMB Settlement Pilot Project. The first Bilateral Swap Agreement was signed with South Korea. 16 industrial parks and economic zones. 7 trn interbank bond market to foreign Central Banks, Sovereign Wealth Funds and international financial institutions. Previously quota was given to the relevant foreign investors on a case-by-case basis. The relevant investors can conduct trading of cash bond, repo, bond lending, bond forward, interest rate swap, forward rate agreement and other transactions permitted by the PBC.