Renminbi internationalisation and China's financial development

12 December 2011

For now, effective capital controls allows the Chinese authorities to retain regulated deposit and lending rates, quantitative credit guidance and bond-market rationing. Relaxing capital controls would put these policies at risk. Reserve requirements can be extended to bank inflows from the offshore market, but only at a cost.

JEL classification: E4, E5, F3, G1, O16, P2