Institutional and Structural Problems of China’s Foreign Exchange Market and the RMB’s Role in East Asia

01.10.2006 | HWWI Research Paper | von Zhang Jikang, Liang Yuanyuan

This paper examines the structural characteristics of China’s inter-bank foreign exchange market and evaluates the prospects for the renminbi to become a regional lead currency. While China has made considerable progress in reforming her foreign exchange market and thereby set the preconditions for gradually moving toward more flexibility in her exchange regime, the foreign exchange market is still hampered by several structural and institutional problems that will continue to put a constraint on the renminbi’s role in East Asia.