Geographic Spread of Currency Trading: The Renminbi and Other Emerging Market Currencies

12 Pages Posted: 7 May 2020

See all articles by Yin-Wong Cheung

Yin-Wong Cheung

University of California, Santa Cruz - Department of Economics

Robert N. McCauley

University of Oxford - Oxford Centre for Global History; Boston University, Global Development Policy Center

Chang Shu

Chief Asia Economist, Bloomberg

Date Written: September–October 2019

Abstract

This paper studies the ongoing diffusion of renminbi (RMB) trading across the globe, the first of such research of an international currency. It analyses the distribution in offshore RMB trading in 2013 and 2016 using comprehensive data from the Triennial Central Bank Survey of foreign exchange markets. In 2013, Asian centers favored by the policy of RMB internationalization had disproportionate shares in global RMB trading. Over the following three years, RMB trading seemed to converge to the spatial pattern of all currencies, with a half‐life of seven to eight years. The previously most traded emerging market currency, the Mexican peso, shows a similar pattern, although it is converging to the global norm more slowly. Three other emerging market currencies show a qualitatively similar evolution in the geography of their offshore trading. Overall, the RMB's internationalization is tracing an arc from the influence of administrative measures to the working of market forces.

Keywords: foreign exchange turnover, international currency, international financial center, renminbi internationalization

JEL Classification: C24, F31, F33, G15, G18

Suggested Citation

Cheung, Yin-Wong and McCauley, Robert N. and Shu, Chang, Geographic Spread of Currency Trading: The Renminbi and Other Emerging Market Currencies (September–October 2019). China & World Economy, Vol. 27, Issue 5, pp. 25-36, 2019, Available at SSRN: https://ssrn.com/abstract=3594701 or http://dx.doi.org/10.1111/cwe.12292

Yin-Wong Cheung (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Engineering 2, Department of Economics
University of California
Santa Cruz, CA 95064
United States
831-459-5077 (Fax)

Robert N. McCauley

University of Oxford - Oxford Centre for Global History ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Boston University, Global Development Policy Center ( email )

67 Bay State Road
Boston, MA 02215
United States

Chang Shu

Chief Asia Economist, Bloomberg ( email )

731 Lexington Avenue
New York, NY 10022
United States

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