RMB internalization looks to be a global trend. Please analyze the pros and cons of internationalized RMB for the economy of Mainland China by reviewing the history of British Pound, US Dollar, Japanese Yen and Euro as international currencies.
Over the past few years, some financial reports estimated that Renminbi will become the third major global settlement currency (together with the US dollar and the Euro). In fact, RMB internalization contributes both positive and adverse effects to the economy of Mainland China.
We would first look at the pros of RMB internalization. The first advantage is the revenue of seigniorage. Seigniorage can be treated as the revenue of the government when the value of the currency is higher than the cost producing
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That is, China has to face the transitional risks. Since the market of China is opened to the world as RMB internalization, the economy of China is highly correlated to the economy of the world. Thus, anything happened in the global financial market will have influence on the economy of China, especially the exchange rate market. If there is a difference between the nominal exchange rate and the real exchange rate, then there will be an arbitrage opportunity. This will stimulate the short-term speculative capital from the global investors to the exchange rate market and therefore have an adverse effect to the stability of Chinese economy. More, since the demand of RMB increases, it will be inevitable that a certain degree of exchange rate appreciation of RMB will …show more content…
The second disadvantages of RMB internalization is that it will increase the difficulty of regulate and monitor the cash flow of RMB in the global financial markets. Since it is quite hard to have a management and monitoring system for the RMB in the offshore market, and thus increase the difficulty of central bank to regulate the cash flow of RMB. Also, RMB may also be associated with some illegal activities such as, smuggling, drug trafficking and so on. It not only affects the stability of Chinese economy, and also increases the difficult to fight against the counterfeiting and money laundering.
Overall, it can be seen that RMB internalization has both pros and cons to the economy of China. However, it seems that RMB internalization is a global trend. Therefore, if the Chinese government aims to minimize the adverse effects of RMB internalization, it would be better to develop a good regulation system for RMB in both local and offshore market so that the stability of Chinese economy can be
In the 1500’s the world was run on an Independent world, which meant that all countries were depending on their selves. Throughout the early to late 1500’s countries were trading with each other for goods either with money or other goods that other countries were unable to produce themselves. There were trade circles all over the world that trade runners would travel to unload their cargo and stock up products they receive from trade. These countries were trading materials such as gold, sugar, tobacco, and metals, and other raw materials that were valuable. By the 1700 the world was turning more interdependent.
A careful study of the relevant international experience and an assessment of the country’s own situation are required if the system is to be both economically rational and politically feasible.
The transcontinental exchange of humans in the early 1500s transformed lives and identities, for slavery led to African-Americans becoming enslaved beings and influenced their new arduous way of life. When the African slaves were brought to America this caused a population change that influenced their identity. Africans were now seen as slaves, which meant that they would work for their master for the rest of their life. As soon as they arrived in America they began working every day in the fields (The Atlantic Slave Trade). They had very little time to themselves since they were always working.
Historian Janet Abu-Lughod would argue that international trade was not eurocentric and Europe was not the start of international trade, and her point is accurate. The Silk Road arose during the period of the Han Dynasty, and it can be defined as an ancient network of trade routes in which was, for centuries, central to the cultural interaction of societies all over the world. This trade network would reach its peak from the 2nd century C.E. to the 13th century, in which it would widen its reach and strengthen its purpose. During these years, the Silk Road would reach from the east Mediterranean to the western parts of Europe, and the spread of trade, ideas, and disease would flood through each trade system. China would produce silk for foreign
AP summer assignment Trading has always been an integral way in which people spread technological ideas, religion, culture, etc. Some religions such as Islam have put the importance of merchantry in their holy book the Quran. Some people like the chinese wanted to impress people with their treasure fleets. However, in order for most people to trade there has to be a routes people they will take to reach their destination. This brings me to the following reason why interregional trading increased.
First and foremost, one must acknowledge the plainly visible fact that the Chinese economy has grown exponentially since the process of integration into the global economic system began. China 's comparative advantages, particularly in the labor sector, has transformed it into the second largest recipient of FDI in the world.1 Over the course of the last 20 years, exports have grown approximately 17.1 percent per year.2 This ultimate result of this investment and trade has been an overall growth rate 8 percent per annum,3 which would have been completely unattainable without the country 's engagement in globalization. Foreign investments have
Short-term and Long-term consequences. The short-term consequences will be as under 1. Management focus on developing new country and understanding PESTEL differences 2. Higher debt 3.
Exam 2 Extra Credit The World Affairs video covers topics about the Chinese economy from Yukon Huang’s book Debunking Myths About China’s Economy. Huang begins by explaining that Americans often possess an inaccurate opinion of China. Many believe that the United States invests too much into the Chinese economy which is leading to job loss and the degradation of our country’s image. When asked which country the world’s economic leader is, most Americans believe it is China. On the other hand, most Chinese believe it is the United States.
ANZ realise the importance of local influence within PRC, however they need to expand and embrace this area in more detail. It is ANZs aim to be a “Super Regional Bank” in the Asia Pacific region which allows for cross boarder seamless financial services and solutions to their client base. ANZ has extremely good core competencies which it can export to PRC in order to give it a competitive advantage in this area, (Porter, 1990). 4 MARKET
In the sixties the food sector was booming. Delhaize was one of the pioneers in the Belgian market by opening its first fully self-service supermarket in 1957 in place Flagey, inspired by the American model of distribution. Other distributors started to copy Delhaize in terms of store format (400 m) and in the concept of self-service (with pre-packaged meat and frozen foods); the era of traditional store with service at the counter was over. Every players in the market understood that they had to find the best places for their stores to compete effectively. The area of competition in the Belgian market quickly became crowded and intense.
In the period of 90s there was a study Bliss (1989) he found and prove that remittance can be used as a good tool to fill the gap of foreign currency shortage. He argues that some of the developing countries can’t achieve the economic growth because of shortage of foreign
If the value continues to inflate, can this be the next new currency to replace U.S. dollars? Would new investors be able to get in on the piece of pie and become rich? Could this bring us just a step closer towards living the American
For example, the sales of Apple products in US will decrease if there is a rise in the US. Because of this the purchasing power will also decrease. Hence the sales will be reduced. Hence, to reduce the rise effect, Apple has purchased itself foreign currency.
Along these lines, unemployment may decrease, as this has different favorable circumstances, for example, lower government using on profits and less social issues. However, this phenomenon includes a number of different expenses. Firstly, if economic growth is unsustainable and is higher than the long run pattern rate, inflations are liable to be seen. An increase in economic growth could prompt an equalization of issued installments. In case the expanded customer expenditure causes further development, there will be an increase in the import sector.
The analysis of the case based on two cultural frameworks by Hofstede and Trompenaars & Hampden-Turner leads us to believe that there are several reasons at play behind JPMorgan’s (JPM) hiring practices in China. In China, identity among collectivists is defined by relationships and group membership where social behavior is governed by norms and obligations. There is an emphasis on relationships even if they may be disadvantageous and in-group goals have the utmost priority.