The Renminbi - Risks and Opportunities Ahead

loading

Since China’s economic ascendancy does not seem to have a ceiling, Penang Monthly takes a look at how far the Chinese Renminbi (RMB) has challenged the US dollar (US$) as a world currency.

There are basically three types of interested parties who need to make payment arrangements in Renminbi (RMB) — an exporter to China, an importer of Chinese goods and the intermediary bank which needs to clear the payments and which might end up with an RMB balance to trade or to invest or alternatively, be short of RMB.

This leads us back to the four functions of money: denomination (invoicing), exchange (trade), store of value (investment) and convertibility (cross-border usage). These functions are as old as money itself although the RMB has fulfilled these functions only to a limited extent and this is the reason why RMB transactions are not as straightforward as US$ payments.


To read the rest of the article and to access our e-Archive, subscribe to us for RM150 a year.



Related Articles