trade, i. e. trade actually not involving reserve currency - issuing countries. therefore, there is plenty of room for alternative currencies to grow, especially in terms of use in bilateral trade between emes themselves. 4. currencies of major emes, in particular the renminbi ( rmb ), the currency of the second largest economy in the world by gdp and international trade, have exhibited their potential to broaden their use in international transactions. such a lasting phenomenon of re - balancing not only allows the international circulation of regional currencies to better reflect their countries ’ increasing proportion to international trade and economic gravity, but also lessen monetary shocks spilt over from advanced economies to emes. 5. according to global economic statistics, the us is the biggest economy in the world. its gdp in 2012 amounted to usd15. 7 trillion. china ranked second as the gdp in 2012 went up to usd8. 2 trillion, equivalent to 52. 2 % of that of the us while japan bis central bankers ’ speeches ranked third. an analysis of the import / export value of these three nations will produce another set of more convincing data. the us imports about usd2. 3 trillion annually while china ’ s import has risen to usd1. 8 trillion yearly. it is worth mentioning that china has all along been a big export country. the increase in import purports enhancement of its national might and increasing demand arising from its consumer market. the third biggest global economy japan has an annual import of only usd880 billion, less than half of china ’ s figure. the country which closely follows china in this respect is germany with an annual import of usd1. 2 trillion. 6. from the above, we can see that china, as one of the emerging markets, is gradually changing its role in the international trade from “ world factory ” of manufactured goods for export to an important import country in the world. it was announced in a recent international forum that in the next five years, china would import goods valued at about usd10 trillion, while overseas investment would amount to usd500 billion. outbound visitors from china would reach 400 million. on the other hand, trade between china and latin america reached usd241. 5 billion in 2011, twenty times that of the year 2000. it is forecasted that it will reach usd400 billion in five years ’ time. being the number one trading partner of brazil, china ’ s export to brazil reached usd

robust benchmarks and products which meet the need of hedging asset side requirements of institutional investors such as banks but also liability side requirements of borrowers exposed to benchmark based interest rates on borrowings and loan pricing. while the lack of adequate liquidity in some instruments is the primary challenge, the reasons for the limited liquidity vary. growing offshore interest in inr products has resulted in globalization of domestic benchmarks. discussed below are some of the issues that need attention to further the process of developing a robust benchmark framework in india. a. diversified participation – a benchmark is as good as the price discovered in the referenced market. efficient price discovery requires, on the one hand, the participation of investors with varying requirements and diversified trading strategies, and on the other, continuous price - making by market - makers. the postgfc regulation has reduced the role banks traditionally played in market - making, even in developed markets. the degree of illiquidity seen in many traditionally liquid markets is partly explained by this development. in the case of india, the preponderance of buy - and - hold category of investors in the gsec and corporate bond market ( banks, insurance companies, pension funds, provident funds ) aligns trading activity in one direction, leading to volatile overshoots. such infirmities need to be addressed to achieve price efficiency, and consequently, robust benchmark. one way of diversifying participant base is to open the markets to the larger global investor base. b. taxation, accounting and regulatory factors – one reason for the limited response to retail participation in g - sec market is that it is tax - inefficient compared to investing in mutual funds, as the latter provides benefits of indexation. similarly, asymmetric accounting norms distort incentives for trading and may also induce inefficiencies to hedging activities. certain regulations have the collateral effect of adversely affecting market liquidity. there should be coordinated efforts to address the unintended consequences of such taxation, accounting or regulatory requirements without undermining the basic objective of such policies. c. segmentation of markets – market segmentation fragments liquidity and leads to price differentials which erodes the efficacy of benchmarks. seen in the context of the need for investor diversity, the fragmentation of rupee markets between onshore and offshore warrants prioritized attention. internationalization of rupee interest rate and currency markets holds the promise of wider investor base and global