Shanghai: China must create more channels for investors and companies to use the yuan if it wants to internationalise the currency and put it on a par with the yen and the euro, central bank officials and economists told a forum in Shanghai on Friday.
The world's biggest holder of foreign-exchange reserves also needs to loosen controls on the use of the yuan for investment and trade outside China, Xie Duo, director of the financial market department of the People's Bank of China, and Li Daokui, an adviser to the central bank, said.
China, the world's third-largest economy, is seeking to reduce its reliance on the US dollar and promote the yuan as a global currency. The central bank last week expanded the use of the yuan for cross-border trade settlement to 18 more provinces, allowing companies based in areas including Beijing and the export hubs of Jiangsu and Zhejiang to use the currency to pay for goods and services.
"It will take a very long time to realise the internationalisation of the renminbi," said Xie, referring to the other name for the yuan. "It won't be easy, but China can boost the use of the yuan due to rising demand from foreign trade companies. We will also offer channels for companies and financial institutions abroad, especially in Hong Kong to invest the yuan within China."
Allowing more trade to be settled in yuan isn't enough, said Li Daokui, one of three academics who sit on the central bank's monetary policy committee.
"After foreigners get hold of the yuan what are they going to do with it?" Li told the forum. "The government needs to gradually open investment channels for foreign investors so that the yuan can be used in more transactions outside China and flow back to China."
Li and Xie said Hong Kong would play an important part in boosting the yuan's international role.
