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Regional Settlement Infrastructure and Currency Internationalization: The Case of Asia and the Renminbi

dc.contributor.authorChangyong Rhee
dc.contributor.authorLea Sumulong
dc.date.accessioned2015-01-24T13:12:45Z
dc.date.available2015-01-24T13:12:45Z
dc.date.issued2014-02-05
dc.identifier.urihttp://hdl.handle.net/11540/1219
dc.description.abstractThe squeeze in United States dollar liquidity that emerged with the global financial crisis highlighted the risks inherent in the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, but also because of its heavy reliance on the US dollar for regional and international transactions. As Asia’s role in the global economy continues to expand, its dependence on the US dollar is bound to increase, raising further its vulnerability to future liquidity shocks. The use of regional currencies for bilateral trade settlement could reduce such vulnerability. As demonstrated by the renminbi trade settlement scheme piloted between the People’s Republic of China; Hong Kong, PRC, China; and Macao, China, the existence of appropriate financial infrastructure could reduce the relatively larger costs of bilateral currency transactions compared with triangular transactions through the United States dollar. As most central banks are securities depositories of government bonds, combining trade settlement with government bond securities settlement could also have large synergy effects without substantial extra costs. This proposal does not require full liberalization of the capital account or full deregulation of capital markets, and is more politically feasible in transition. As such, extending the trade settlement scheme to the rest of Asia and appending a government bond payment and securities settlement system could be a practical solution to international monetary system reform and the diversification of settlement currencies.
dc.languageEnglish
dc.publisherAsian Development Bank Institute
dc.rightsCC BY-NC-ND 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/igo/
dc.titleRegional Settlement Infrastructure and Currency Internationalization: The Case of Asia and the Renminbi
dc.typeWorking Papers
dc.subject.expertFinancial Stability
dc.subject.expertFinancial Management System
dc.subject.expertFinancial Restructuring
dc.subject.expertCapital Market Development
dc.subject.expertErosion
dc.subject.expertMarket Development
dc.subject.expertEconomics
dc.subject.expertErosion
dc.subject.expertInternational Economics
dc.subject.adbInternational Financial Market
dc.subject.adbMultilateral Financial Institutions
dc.subject.adbEconomic Recession
dc.subject.adbMarket
dc.subject.adbCrisis
dc.subject.naturalBusiness recessions
dc.subject.naturalMultilateral development banks
dc.subject.naturalRegulatory reform
dc.subject.naturalCapital
dc.title.seriesADBI Working Paper Series
dc.title.volumeNo. 457
dc.contributor.imprintAsian Development Bank Institute
oar.themeFinance
oar.themeEconomics
oar.adminregionAsia and the Pacific Region
oar.countryBangladesh
oar.countryBhutan
oar.countryIndia
oar.countryMaldives
oar.countryNepal
oar.countrySri Lanka
oar.countryBrunei Darussalam
oar.countryCambodia
oar.countryIndonesia
oar.countryLao People's Democratic Republic
oar.countryMalaysia
oar.countryMyanmar
oar.countryPhilippines
oar.countrySingapore
oar.countryThailand
oar.countryViet Nam
oar.countryCook Islands
oar.countryFiji
oar.countryKiribati
oar.countryMarshall Islands
oar.countryMicronesia, Federated States of
oar.countryNauru
oar.countryPalau
oar.countryPapua New Guinea
oar.countrySamoa
oar.countrySolomon Islands
oar.countryTimor-Leste
oar.countryTonga
oar.countryTuvalu
oar.countryVanuatu
oar.countryAfghanistan
oar.countryArmenia
oar.countryAzerbaijan
oar.countryGeorgia
oar.countryKazakhstan
oar.countryKyrgyz Republic
oar.countryPakistan
oar.countryTajikistan
oar.countryTurkmenistan
oar.countryUzbekistan
oar.countryChina, People’s Republic of
oar.countryHong Kong, China
oar.countryChina, People’s Republic of
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.dep.sourceADBI
oar.identifierOAR-002224
oar.authorRhee, Changyong
oar.authorSumulong, Lea
oar.importtrue
oar.googlescholar.linkpresenttrue


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    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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