RMB Internationalization: Integrating the Great Wall with Global Capital Markets

by Arin Ray, June 12, 2017
Industry Trends
Global, Asia-Pacific

Abstract

RMB Internationalization offers numerous benefits to market participants.

Celent has released a new report titled RMB Internationalization: Integrating the Great Wall with Global Capital Markets. The report was commissioned by the Depository Trust & Clearing Corporation (DTCC) and was written by Arin Ray, an Analyst with Celent’s Securities & Investments practice.

China has made significant progress in its bid to internationalize its currency, the Renminbi. Several policy and market structure changes implemented by Chinese and other national regulators, as well as by some leading infrastructure providers, are shaping the RMB Internationalization journey.

RMB Internationalization offers numerous benefits to players in capital markets. Investment managers and hedge funds can gain easier and wider access to Chinese assets with high return and better risk management features.

The RMB Internationalization process also has some challenges; for example, rules and practices on issues relating to trading and settlement in China differ significantly from international standards. These issues create operational challenges at a firm level which result in inefficiencies for capital market firms, and hinder faster adoption of the RMB among international participants.

“Developing capabilities to overcome local nuances will likely be operationally difficult and expensive for individual firms,” says Ray. “There is a clear need for more coordinated efforts among market participants at an industry level, and active engagement and coordination with regulatory authorities to resolve them.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

 

Background to RMB Internationalization

3

 

Implications of RMB Internationalization

4

 

About this Report

4

Analysis of the Current Environment

6

 

The Progress So Far

6

Regional and Global Perspectives of RMB Internationalization

10

 

Regional Perspectives

10

 

Global Perspectives

12

 

Accessing RMB Instruments Internationally

13

 

Impact of RMB Internationalization on Other Currencies

13

Use of RMB in Settlement and Collateral Management

15

Opportunities in RMB Internationalization for Market Participants

16

Operational Challenges with RMB Internationalization

19

Conclusion

24

Leveraging Celent’s Expertise

25

 

Support for Financial Institutions

25

 

Support for Vendors

25

Related Celent Research

26

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