Convertibility as a step for the RMB internationalization

The paper concentrates on the issue of currency convertibility in the context of Chinese strategy of the RMB internationalization. It argues that the motive for that strategy was ignited by China’s dissatisfaction with the long lasting unstable international monetary system. Recent global financial crisis intensified China’s urge to get rid of “dollar trap” and look for a diversified international reserve currency system where the Chinese yuan could take a place. The paper investigates the step-by-step approach from the trade settlement to more comprehensive policy measures. It also emphasizes the importance of domestic financial reforms for the RMB full convertibility, including flexible exchange rate, market determined interest rate and deepened domestic financial market.