Allianz Global Investors: Long term goal for China is to internationalise currency

The long term goal for China is to internationalise its currency, according to RCM Asia Pacific, which will be of interest to private wealth holders.

In internationalising its currency, the renminbi (RMB) would be more widely used for both trade and investment.
This would lead to convertibility of the capital account.

Mark Konyn, chief executive officer of RCM Asia Pacific, a company of Allianz Global Investors, said that he envisaged that China's growing influence on the global economy would increase the importance of the RMB.

The implication of this would be central banks considering it as a reserve currency upon full convertibility, though Mr Konyn hesitated on it actually replacing the US dollar (USD) as the only reserve currency.

He added: "This view should be seen in the context of the overall change affecting the way investors and central banks are thinking about reserve currencies more generally, impacted by changes in the pattern of global trade and the increasing need for banks and investors to diversify away from their dependency on the USD as the only reserve currency."

It is expected that China will widen the trading band for the RMB to control the amount of "hot money" entering the economy.

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