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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/46496
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| Title: | | Pegging the Renminbi to a basket: Facts, prospects and consequences  |
| Authors: | | Oksanen, Heikki |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper: Monetary Policy and International Finance 3254 |
| Abstract: | | On 19 June 2010 the Chinese authorities announced that the renminbi (RMB) was henceforth to be pegged to a currency basket. Yet, it has quite closely followed the USD, though having appreciated by 2.7 % by the time of writing. At the G20 Seoul Summit on 11-12 November 2010, China committed to further reform the RMB exchange rate regime. We discuss here what a genuine basket peg could mean for China, with the view that the weight for the EUR should obviously be significantly increased, the SDR being a strong option for practical implementation. This would also have a positive impact on the EU. China's currency reform has possible implications for its USD-dominated assets. Their reduction could trigger a further depreciation of the USD. The potentially costly consequences call for new rules for the world financial architecture. China's expansion will inevitably lead to a diminishing international role for the USD. |
| Subjects: | | China renminbi yuan basket peg foreign exchange rates |
| JEL: | | F30 F31 F33 F42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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