Financial Services

Renminbi rising

February 26, 2014

Asia

February 26, 2014

Asia
Our Editors

The Economist Intelligence Unit

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Key findings include:

  • A majority of institutional investors (IIs) think the renminbi will one day surpass the US dollar as the world’s major reserve currency. Within China there is more optimism: 62% of IIs see a redback world on the horizon, compared to 43% of those outside China.
  • Two-thirds of IIs expect China to complete its financial liberalisation within ten years, with a majority expecting major reforms within five. But there is uncertainty about the direction and urgency of short-term reforms towards this goal.
  • Foreign investors expect China to privatise its banking system sooner rather than later. Nearly half (47%) of foreign-headquartered IIs expect China to privatise its banking system within three years, compared to just 19% of domestic respondents with the same view.
  • Chinese IIs expect offshore renminbi trading to expand at home. While IIs agree that Hong Kong will continue to dominate trading over the next three years, Chinese IIs rank Shanghai and other onshore free trade zones as the second place where renminbi portfolio trading is likely to see rapid growth, while non-Chinese IIs think Singapore is a more likely growth area.

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