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The Role of London and Frankfurt in Supporting the Internationalization of the Chinese Renminbi

Research output: Contribution to journalArticle

Original languageEnglish
JournalNew Political Economy
DOIs
Accepted/In press8 Feb 2018
Published21 May 2018

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  • The role of London and_PARDO_Accepted12018_GREEN AAM

    Pacheco_Pardo_Knoerich_Li_The_role_of_London_and_Frankfurt_in_supporting_the_internationalization_of_the_Chinese_Renminbi_New_Political_Economy_accepted_for_publication_.pdf, 373 KB, application/pdf

    Uploaded date:18 Apr 2018

    Version:Accepted author manuscript

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Abstract

Why do foreign countries support the internationalization of the renminbi (RMB) by establishing offshore RMB centres? The Chinese government has openly stated that internationalization of the country’s currency is one of its top priorities. International use of the RMB has already significantly increased in recent years. Yet, existing literature has almost exclusively focused on the structure of the Chinese economy and China’s domestic politics to explain RMB internationalization. With this article, we seek to fill a gap in the literature by analysing the reasons why foreign countries support RMB internationalization. Using the cases of Germany and the UK, we show that a combination of economic and political factors, partly in response to inducements from Beijing, best explain why foreign countries support Chinese efforts to internationalize the RMB. Some of these factors are similar to both countries, but there are also differences regarding the reasons why they support this key Chinese goal. We use the case of the establishment of offshore RMB centres to conduct our analysis, given the clear political nature of foreign countries allowing China to open them in their own territory. We thus also show that the Chinese currency is starting to display the characteristics of negotiated currencies.

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