Yuan expected to be int’l currency around 2020 (3)

Yuan qualified to be international currency by 2020

Experts said that internationalization of the yuan is of great significance. Pan Yingli, professor of Antai College of Economics and Management, Shanghai Jiao Tong University, said that China might well become the world’s largest economy around 2020, and that the yuan is absolutely qualified to be an international currency to prevent exchange rate risks during globalization.

Pan also said transactions of overseas products and assets are made in yuan is an important symbol of internationalization of the yuan. An important prerequisite of internationalization of the yuan is to nurture and fortify presence of overseas businesses, that is, Chinese enterprises and financial institutions must gain dominance gradually in the international economic and financial transactions.

Chen Xuebin, professor and executive vice president of the Institute of Finance, Fudan University, said that internationalization of the yuan entails cultivation of the corresponding financial market, improvement of the regulatory and control systems, and transformation of capital flow channels, exchange rate formation mechanism, and economic growth mode. It is necessary for the yuan to maintain a trend of small appreciation in the early period of internationalization. Chen recommended that the yuan should disconnect itself from U.S. dollar, and cling to a basket of currencies in order to form a slight-fluctuation exchange rate mechanism.