The Reserve Bank of India Act, 1934 provides a broad legal mandate to the Reserve Bank to secure monetary stability and generally to operate the currency and credit system of the country to its advantage. In practice, this meant the dual objective of growth and price stability, the relative emphasis being dependent on the context.
Already, over 10,000 banks worldwide are offering their customers the opportunity to settle transactions in renminbi, a remarkable increase from just over 900 banks in June 2011.2 Although international use of renminbi – approximately 0.69% of all transactions worldwide are currently settled in renminbi3 – does not reflect China’s economic prowess at present, with its increasing convertibility, the currency has the potential to become one of the future global reserve currencies.