Nicholas Lardy, an expert on China's economic issues at the Peterson Institute for International Economics, a well-known Washington think tank, believes that the entry of RMB into the basket will not have much impact on the asset allocation of central banks in the short term, but I believe that more and more countries will be willing to hold RMB as reserve financial assets in the future.

He said that at present, the US dollar is still the most important reserve currency held by central banks, followed by the euro, the pound and the yen. For a long time to come, the US dollar will be the most important reserve currency, and the entry of RMB into the basket will not challenge the status of the US dollar as the main reserve currency.

Lardy said that the United States became the world's largest economy at the end of the 18th century, but it was not until the Second World War that the US dollar became the world's main reserve currency. If history is the guide, it will take decades for the RMB to become the main reserve currency.

Lardy said that in line with the trend of RMB internationalization, the Bank of China has taken a series of reform measures in recent years, including opening the inter-bank bond market to foreign central banks, sovereign wealth funds and international financial institutions, further improving the quotation of the central parity of RMB exchange rate, and canceling the upper limit of deposit interest rate. These measures are all aimed at making the value of RMB more determined by market supply and demand and having a higher degree of free use.

He pointed out that the reform measures adopted by China will make it more feasible for RMB to join SDR, and it will also have a great potential impact on China's domestic economic reform and development. According to Xinhua News Agency

Brokerage analysts "pulse" RMB to join SDR

Foreign capital will not significantly increase RMB assets

RMB will join SDR, and the market is most concerned about whether international institutions will increase the demand for RMB currency and RMB asset allocation.

Hu Yufeng, a researcher at CITIC Securities, believes that the key to determining the attractiveness of RMB assets lies in the domestic economic situation. At present, China's fundamentals are not optimistic, coupled with the impact of the Fed's expectation of raising interest rates during the year, the attractiveness of RMB assets is limited, and the motivation for capital inflows in the short term is not great. Comparing the yield trend of Chinese and American government bonds, it is not difficult to find that the spread between Chinese and American government bonds and yield to maturity is gradually narrowing with the strengthening of American economic recovery. Under the condition of weak internal economic growth and strong external diversion attraction, it is expected that there will be no large amount of funds flowing into the domestic capital market after RMB joins SDR.

Wang Han, an analyst at Industrial Securities, also said that the impact of joining SDR is more reflected in the level of confidence-it helps to enhance the attractiveness of RMB assets, but its contribution to the widespread use of RMB is limited. From the perspective of RMB internationalization, although the current RMB accounts for the third place in the world in trade settlement, it is still low compared with the US dollar and the euro, and it has not yet entered the top five in cross-border payment. Therefore, RMB internationalization still has a long way to go, and joining SDR is only a new beginning.

what will RMB bring to us after joining SDR?

A can enhance the world's confidence in China's economy

RMB's entry into SDR is a win-win move for China and the world. For China, in the short term, it will enhance the world's confidence in the RMB, China's financial market and China's economy, urge official institutions of various countries to consider increasing the proportion of RMB in their reserve composition, and promote private institutional investors to hold more RMB assets, thus expanding the use of RMB in financial transactions.

in the long run, joining SDR will also help to accelerate the reform of China's financial market, and make market factors play a greater role in the allocation of financial resources, which can be embodied in RMB exchange rate, interest rate liberalization, capital account opening, etc., which will be beneficial to China's economic rebalancing.

the addition of RMB will also make the SDR currency basket more objectively reflect the status and importance of major currencies in the world trade and financial system. Under the existing international monetary system, the dollar is still dominant and lacks flexibility. RMB joining SDR will increase the weight of RMB assets in global investment allocation.

B will RMB depreciate after it is put into the basket?

if a currency "enters the SDR", it will officially become the international official reserve currency, which will prompt official institutions of various countries to consider increasing the proportion of the currency's reserve assets in their reserve composition, and promote private institutional investors to hold more of the currency assets.

Moody's, an international rating agency, recently released a report saying that RMB "entering the basket" SDR will encourage central banks to invest in RMB assets, which is expected to stabilize RMB demand and partially offset the impact of capital outflow in the uncertain market environment.

Yi Gang, deputy governor of the People's Bank of China, said at the annual meetings of the IMF and the World Bank in October that the reform of RMB exchange rate formation mechanism will continue to move towards marketization in the future, and the RMB exchange rate will be more flexible, floating in two directions and basically stable at a reasonable and balanced level.

C it is more convenient to invest in stocks and real estate abroad

RMB's participation in SDR can increase the confidence of the international market in RMB, make the RMB in the hands of ordinary people in China stronger, and at the same time, it is also conducive to enterprises' cross-border investment and overseas purchase of resources, technology and services.

from the perspective of personal consumption, as more and more countries recognize and are willing to accept RMB, the exchange between RMB and foreign currency will be more convenient in the future, and it is not out of reach to use RMB frequently when traveling and shopping abroad.

RMB's participation in SDR will also help broaden overseas investment channels for domestic residents. In the future, China people can invest in real estate, stocks and bonds abroad more conveniently. Foreign investors can also participate more in China's domestic stocks, funds, national debt, P2P and other investment and financial management.