The rise of the renminbi as an international currency would facilitate trade, investment and financial activities that are commensurate with the continued growing importance of China in the global landscape. Of significance to the Asian region, the rising importance of the renminbi will reinforce the trend towards greater regional financial and economic integration. China is already the main trading partner for most economies in the region. The increased usage of the renminbi and the more developed regional financial markets for the renminbi provides an opportunity to recycle savings within the region and thus support the increased intra-regional investment activities. More renminbi-based trade within the region will create pools of renminbi liquidity which would create a demand for instruments which would in turn spur the development of more efficient and integrated renminbi capital markets in the region that can contribute towards better intermediation between the surplus and deficit units in the region. In addition, the renminbi can be a source of stability for the global monetary system. The increasing use and recognition of the renminbi as an international reserve asset will strengthen the foundations of the current global monetary system that is currently reliant on too few major currencies. With the increased economic and financial interconnectivity in the world today and the greater potential for international policy spillovers, a more multipolar global monetary system with more diverse sources of global liquidity would contribute towards a more stable international financial system. Looking ahead, these developments present tremendous opportunities for the private sector.

China has a high rate of savings, healthy external position, an inherent competitive mass manufacturing advantage and a large educated workforce to sustain its long-term potential economic growth. Importantly, the narrative of the global future of China cannot be explained in isolation – it is part of a broader account of the growing importance and greater integration of Asia, and the stronger interlinkages with other emerging economies in the global economic landscape. China and the region are becoming more than just global exporters. The increased efforts are seen in the steps to develop more extensive investment and financial linkages in the region as well as the rest of the world through key strategic initiatives such as the One Belt One Road initiative, the Asian Infrastructure Investment Bank and the New Development Bank. Reflecting its expanding role in the global economy and the international financial BIS central bankers’ speeches  1  system, the renminbi will assume greater strategic importance in facilitating the development of these new investment and financial linkages, including meeting the greater demand for infrastructure spending. This is also reinforced by the transition of Asia from a global producer to a global consumer thus becoming an important driver of growth in the world economy. The rise of the renminbi is often associated with expectations of rapid capital account liberalisation. In this regard, the historical experience of the major currencies over the recent fifty years holds important lessons for the renminbi.