Leiden University Student Repository

Lape, Martynas (2018)

The Challenges of RMB Internationalization

Bachelor thesis | International Studies (BA)

The RMB Internationalization has declined since 2015. For this reason, the question arises - What inhibits RMB Internationalization? The main argument is risk. the Chinese government balances currency risk in order to maintain the competitiveness and lower volatility of the exchange rate. If the Chinese government and policy makers refrain from stable RMB exchange rate, foreign investors will become less confident in holding RMB-denominated financial instruments. Furthemore, the thesis employs Chris Brummers' systemic risk method and explores two case studies - Pakistan, and the City of London. These two cases presents different versions of risk. Pakistan represents high levels of risk, and the City of London is a low-risk for RMB Internationalization. While Pakistan is burdened with environment, security and debt risks, the City of London offers an access to one of the largest financial hubs and opportunity to make foreign investors more comfortable in holding RMB-denominated...Show moreThe RMB Internationalization has declined since 2015. For this reason, the question arises - What inhibits RMB Internationalization? The main argument is risk. the Chinese government balances currency risk in order to maintain the competitiveness and lower volatility of the exchange rate. If the Chinese government and policy makers refrain from stable RMB exchange rate, foreign investors will become less confident in holding RMB-denominated financial instruments. Furthemore, the thesis employs Chris Brummers' systemic risk method and explores two case studies - Pakistan, and the City of London. These two cases presents different versions of risk. Pakistan represents high levels of risk, and the City of London is a low-risk for RMB Internationalization. While Pakistan is burdened with environment, security and debt risks, the City of London offers an access to one of the largest financial hubs and opportunity to make foreign investors more comfortable in holding RMB-denominated financial assets.Show less

Foreign Exchange

Belt And Road Initiative

Renminbi

RMB

Risk

Author

Lape, Martynas

Faculty

Faculty of Humanities

Specialisation

BA International Studies

Supervisors

d' Hooghe, Ingrid

ECTS Credits

15

Language

en