anselmo teng : internationalization of the rmb and the role of macao as a financial platform address by mr anselmo teng, chairman of the monetary authority of macao, at the “ 2013 internationalization of rmb global forum ”, jointly organised by the shanghai institute of the international financial centre of the shanghai university of finance and economics and the centre for international finance and regulation ( australia ), shanghai, 26 may 2013. * * * dear delegates, ladies and gentlemen, 1 ) first of all, i would like to express my gratitude to the shanghai institute of the international financial centre of the shanghai university of finance and economics for inviting me to this forum. at the moment, the internationalization of the rmb not only attracts the attention of the mainland community, but also global financial markets. i am very pleased to take this opportunity today to present some of our views on this important topic and the role of macao as a financial platform. the internationalization process of the rmb 2 ) over the years, in order to deepen further financial reforms, the rmb internationalisation process has been gradually implemented. in the 12th five - year plan, the central government has clearly stated the strategic plan of “ expansion of rmb cross - border use and gradual realisation of rmb capital account convertibility ”. in recent years, to steadily and consistently promote the rmb internationalisation, the people ’ s bank of china ( pboc ) and relevant government agencies have broadened the flow - back channel for the rmb, increased the scope for rmb cross - border use and opened up rmb foreign direct investment to foreign enterprises. 3 ) after the eruption of the global financial crisis in 2008 / 09, however, the international financial landscape has undergone significant transformation. while the world would welcome china ’ s currency reform towards free convertibility, concerns for destabilising capital flows, against a backdrop of prolonged adoption of quantitative easing policies by advanced countries, have notably heightened. international organisations such as the imf holds a more “ practical ” position that capital controls are a legitimate part of the toolkit to manage capital flows in certain circumstances, especially for emerging - market economies. with proper control of systemic risk in mind, the degree of stability of the international financial system would correspondingly affect the pace of the currency reform in china. relaxation of capital control towards free convertibility and hence the internationalization of the rmb, while i believe would remain the ultimate goals of

effective tools of the communication policy. exchange rate policy and liquidity management exchange rate policy along with inflation targeting, the central bank will continue to implement the floating exchange rate regime in 2009. as stated in the annual monetary and exchange rate policy announcements, which have been published since 2002, the foreign exchange rate is not a policy tool or target under this regime and it is determined by the supply and demand conditions in the market. whereas the main factors affecting foreign exchange supply and demand are the monetary and fiscal policies implemented, international developments, economic fundamentals and expectations. although there is no exchange rate level to be maintained in a floating exchange rate regime, a strong foreign exchange reserve position is very important for emerging economies like turkey to eliminate the unfavorable effects of potential internal and external shocks and to boost the confidence in the country. therefore, the central bank holds foreign exchange buying auctions to build up reserves at times where foreign exchange supply increases relative to the foreign exchange demand. as meticulous in minimizing the impact on supply and demand conditions in the foreign exchange market, the central bank has been buying foreign exchange via transparent foreign exchange buying auctions with pre - announced terms and conditions. although the aim is to run auctions according to the pre - announced program, in case of unexpected significant developments pertaining to the foreign exchange supply, amendments to the auction programs can be made with prior notice. dates of monetary policy committee meetings and the schedule of the release of the inflation report and the financial stability report can be found in the annex. accordingly ; ( i ) the maximum amount to be purchased in daily foreign exchange buying auctions was set as usd 90 million for 2008, with usd 30 million for the auction amount and usd 60 million for the optional selling amount. ( ii ) however, as a result of the increased exchange rate volatility in our foreign exchange market parallel to the increased expectations of a possible stagnation in developed economies, the maximum daily amount to be purchased was reduced to usd 45 million, with usd 15 million for the auction amount and usd 30 million for the optional selling amount, as of 10 march 2008. ( iii ) meanwhile, the central bank has implemented a set of measures since october, with the aim of abating potential problems in the turkish financial markets that may arise from global developments. within this scope, foreign exchange buying auctions were suspended as of 16 october 2008 in order to keep the liquidity, which is permanently withdrawn from the foreign exchange market through foreign exchange buying