During the epidemic, the performance of RMB and RMB assets seemed to be "anti-epidemic", and the record interest rate difference between China and the United States also attracted investors to allocate more assets in China. When the last round of crisis broke out, the voice of "dollarization" grew stronger, and the Bank of China also promoted the internationalization of RMB, but at that time, the depth and infrastructure of China's own financial market needed to be strengthened. Today's "dollar shortage" actually reveals the hidden problems behind the dollar hegemony. Will this be an opportunity to promote the internationalization of RMB?
He also mentioned, "We have no ability and no need to maintain such a high positive communication with the outside world. I believe that policy makers mainly consider the domestic interest rate level based on the domestic economic situation, rather than attracting foreign investment. " In his view, fundamentally speaking, the impact of Chinese and foreign epidemics on the economy is mainly the time difference, and the degree may not be much different. The time difference of about one quarter is not enough to affect long-term investment decisions, including the adjustment of the global industrial chain.
In recent years, the global outbreak of the COVID-19 epidemic has plunged the global financial market into great turmoil, and the discussion on the safety of China's foreign reserves has become increasingly fierce in academic and financial circles. Among them, Zhang Anyuan previously commented on "Selling US debt" in CBN. More market knowledge and less whimsy "caused a heated discussion. "This time, CBN interviewed Zhang Anyuan again on hot topics such as foreign reserve security, RMB internationalization and the latest Fed policy.
It is unrealistic for China to sell a lot of American debt.
CBN: Recently, CBN published your views on "selling American debt". The core seems to be: the main reason why we can't consider selling a lot of US debt is that the market capacity of spot, reserve, futures and gold is not enough to absorb such large-scale assets?
Zhang Anyuan: Yes, we must first consider the market capacity. Just like playing chess, after the first step, at least think about what the next second step is. We can't ignore it. Let's sell it first. Relevant decisions must be commercial considerations, not political decisions.
CBN: Is the bond market in Europe and Japan an option? These two markets should be big enough to absorb trillions of dollars.
Zhang Anyuan: The bond markets in Europe and Japan are considerable, but both economies have negative policy interest rates for many years, and the interest rate of national debt is also negative. For example, the minimum deposit convenience rate of the European Central Bank is -0.5%, the one-month yield of French government bonds has exceeded -2%, and the yield of German 10-year government bonds has reached -0.85%. The Bank of Japan's policy target interest rate is -0. 1%, 1 year treasury bonds have reached -0.37%, and1year treasury bonds have a minimum of -0.297%. At present, the Federal Reserve has not reached the point of negative interest rate, and the yield of government bonds has hit record lows, but it is still positive.
I think China now holds a considerable amount of European and Japanese bonds. At present, the dollar index is at a high level. From the perspective of exchange rate, European and Japanese bonds may have investment value, but from the perspective of credit risk, European debt and even some sovereign debt may have large-scale default risk. After all, they don't have an independent monetary policy, and fiscal stimulus is also heavily subject to EU regulations.
CBN: We have noticed that some members of the US Congress have recently made extreme remarks about China's holding of US debt. Is this a major risk?
Zhang Anyuan: Any country that holds assets abroad will face political and policy risks. Generally speaking, political and policy risks in developing countries are greater. The impact of the current epidemic will greatly reduce the debt repayment ability of some developing countries, and some countries will seek a new round of debt relief.
From the market point of view, the comments of individual US congressmen should be understood as a kind of risk. There are 535 members in the US Senate and House of Representatives. The emergence of this extreme view is a matter of probability. Trillion-scale investment decisions cannot be used to echo an extreme statement. Recently, the Federal Reserve has provided a new repurchase channel, and central banks can directly use US debt to obtain US dollar liquidity, which is the official policy.
CBN: You mentioned that over the past decade or so, the initiative to sell American debt has always existed, and its root seems to be the excessive asset scale. Should it have been adjusted long ago?
Zhang Anyuan: A reasonable reserve scale is a difficult question to answer. Judging from some indicators such as import demand for several months, the scale of reserves is too large. But from another angle, such as currency issuance, it is too small. From the market point of view, once the scale of reserves drops significantly, it will cause panic. From this dimension, it can be understood that the market needs 3 trillion yuan to be an anchor.
On the issue of adjustment, we began to consider it more than ten years ago, when the total size of reserves was less than 1 trillion dollars. In 2007, it issued 1.55 trillion special treasury bonds, transferred 200 billion US dollars to CIC, and engaged in differentiated investment with the foreign exchange bureau, including a considerable part of non-US debt and non-US assets. After years of practice, it is very difficult to manage the safety, profitability and liquidity of this kind of investment.
The basis of RMB internationalization is to let overseas entities absorb more funds.
First Finance: Can RMB internationalization finally solve the contradiction of passive holding of reserves? How to evaluate the internationalization of RMB for more than ten years?
Zhang Anyuan: That's for sure. If we are a major international reserve currency issuer, the demand for holding other reserve currencies will definitely drop sharply.
Internationalization of local currency cannot be achieved overnight. In recent years, the status of RMB in international settlement, international reserve and international pricing has been promoted, and its internationalization achievements are obvious to all. However, there is still a considerable gap between the local currency and the dominant currency in terms of trade settlement and the proportion of global foreign exchange reserves. The reason behind this is related to the promotion of internationalization mainly through financial intermediaries and financial market organizations. Due to the underdeveloped overseas RMB capital market, cross-border arbitrage is the main source of income for financial institutions and the driving force for internationalization. The inflow and outflow of local currency dominated by arbitrage motivation increases the difficulty of RMB capital account management. In addition, a large amount of RMB flows to the offshore center open market, which forms the shadow price of exchange rate and interest rate, and also affects the domestic independent pricing power.
CBN: What are the solutions to these problems?
Zhang Anyuan: China has huge import and export demand and huge domestic capital supply, which should be used as a basis to form a sustainable international circulation of RMB. The channels of local currency outflow include: foreign investment, RMB external payment of imported goods and services, and other RMB demand related to the project in the other country. The return channels include: foreign exchange payment for imported equipment, equipment and services invested abroad and profit repatriation.
Previously, RMB settlement of cross-border trade and investment was also based on the above considerations. However, financial intermediaries, which mainly rely on indirect financing, have no ability to control relevant links. In this case, we might as well consider more ways of equity investment to promote RMB outflow, combine currency internationalization with capital internationalization, and combine with the real economy, so that more funds can be absorbed by the real economy.
There is no need to deliberately maintain a high spread between China and the United States.
CBN: Will the current Fed policy weaken the international status of the US dollar?
Zhang Anyuan: At least we can't see this now. The dollar is a global currency, which is equivalent to the Federal Reserve providing public goods to the world. In a crisis, currency issuers have the responsibility to provide liquidity to domestic and foreign markets. One day, the RMB will have the same status as the US dollar, and so will the People's Bank of China. There are some superficial comments on the Fed's policy in China. I don't know where I got my confidence. Only the Federal Reserve knows best what kind of policies the United States needs.
At present, the big ship of global economy and finance is sinking, and asset prices and commodity prices are still falling. Only release water indefinitely, and provide "buoyancy" with liquidity, hoping to support prices. It is too linear and premature to discuss the sharp rise in asset prices and commodity prices after the epidemic. After all, liquidity can be released or collected.
Since the formal collapse of the Bretton Woods system in the 1970s, global financial crises have broken out every ten years, including the Latin American debt crisis in the 1980s, the Asian financial crisis in the 1990s and the subprime mortgage crisis in the 1990s, and this time they have not escaped. It is human nature that people will soon forget the crisis after it. The animal spirit of the financial market will always exist, and this time will be no exception.
CBN: After the epidemic, RMB assets are sought after by the world? Is RMB internationalization facing a new round of opportunities?
Zhang Anyuan: In recent years, RMB assets have been favored by international investment. The impact of the epidemic has not weakened this point, but it may be needless to say how to further strengthen it. Recently, foreign investors' enthusiasm for China's sovereign debt mainly focuses on spreading. China's economic growth rate under the severe epidemic can't afford such a high capital gain at present; We have no ability and no need to maintain such a high positive communication with the outside world. After the spread narrows, the global pursuit of RMB assets will also weaken. In my opinion, policy makers mainly consider the domestic interest rate level based on the domestic economic situation, rather than attracting foreign investment.
Fundamentally speaking, the impact of Chinese and foreign epidemics on the economy is mainly the time difference, and the degree may be similar. The time difference of about one quarter is not enough to affect long-term investment decisions, including the adjustment of the global industrial chain.
The recognition of the global status of the US dollar after the war was based on the fact that under the shortage caused by the war, a large amount of materials were supplied by the United States (Roosevelt called it "the arsenal of democratic countries"), and everyone needed US dollars to pay for imports. We have not seen this particularly remarkable new change in the global response to the epidemic.
The real internationalization of RMB is bound to depend on the open and large-scale RMB capital market, which has a long way to go.