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The current internationalmonetary system has critical defects. An effective reform of the system callsfor a new international currency, for which the Renminbi may be a promisingcandidate. Despite the rapid growth of the Chinese economy, certain prerequisiteshave to be satisfied before the Renminbi can be internationalized. China needsto ensure full convertibility of the Renminbi and further develop its financialmarkets to facilitate the process of internationalization.
This course will discuss variousaspects of the Renminbi internationalization. Specifically, innovativesuggestions will be provided on topics including the reform of theinternational monetary system, the opportunities and challenges of the Renminbiinternationalization, and the evolution of China’s monetary and exchange ratepolicies. Since the internationalization of Renminbi is important to the futureof Hong Kong as an international financial center, the lectures will alsodiscuss the possible implications of this process for Hong Kong.
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Week 1: The Role of the Renminbi in the International Monetary System
The lecture will commence with a eview on the roles of money in the domestic and international monetary systems. Upon analyzing the critical defects of the international monetary system and the necessity of reform, we will discuss the global governance and institutional reform of the international monetary system. An assessment on the costs and benefits associated with the internationalization of the Renminbi fo he system will conclude the lecture.
Week 2: Internationalization of the Renminbi and Renminbi Offshore Markets
This lecture will address the following questions: What are the aims of internationalizing the Renminbi? Wha analytical framework can we adopt to draft proposals on the possible process of Renminbi internationalization? For China, what are the costs and benefits of establishing Renminbi offshore markets? How can the risks to monetary and financial stability be managed prudently? What are the implications for othe areas, particularly Hong Kong?
Week 3: The Monetary and Exchange Rate Policy of China
The lecture will begin with a analysis on the approaches, instruments, and intermediate targets of China’s monetary policy. The legal framework of monetary regulation, the role of the central bank, and the objective of monetary policies will then be elaborated, followed by a brief discussion on the interest rate and exchange rate liberalization. The lecture will then proceed to review the monetary policy stance of the People’s Bank of China over the years and discuss the recent experience of monetary policymaking in China.
Week 4: The Future of Hong Kong’s Monetary System
This lecture will focus on the monetary system of Hong Kong. We will review the history of Hong Kong’s monetary policy and monetary control, thus revealing how the monetary system of Hong Kong has been designed to serve the public interest most effectively and maintain Hong Kong as an international financial center. The lecture will conclude with a discussion on the future of the Linked Exchange Rate System, which has served Hong Kong well for almost 30 years.
