Internationalisation of the RMB and capital flows At the outset, I think it is useful to be precise about what we mean when we talk about “internationalisation”. In my view, for a country’s currency to be viewed as internationalised there are two key conditions that need to be met.
The first is that the country’s currency is used for transactions between its residents and nonresidents. The progress that China is making in this area is significant, particularly on the trade side. Over the past few years, the share of China’s international trade that is denominated in RMB has risen significantly and this trend is expected to continue.