China’s booming economy and emergence as a world power raise the question of whether or not the Renminbi should be internationalised.
China is increasingly debating whether or not the Renminbi should be internationalised, possibly joining the US Dollar and the Euro as an international vehicle currency (IVC) – that is, a currency that other countries use to denominate the prices of their traded goods and international loans. Related to this is a debate about whether Shanghai can become a first-tier international financial centre (1-IFC) like London and New York.
Financial history can help to answer these questions. First, a city can become a 1-IFC only if its national currency is an IVC.
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