| Abstract: |
This article outlines our thoughts on the following three issues. First, will
the renminbi become an international currency in the foreseeable future?
Second, what does the international use of the renminbi mean for Hong Kong?
Third, should the Hong Kong dollar exchange rate be repegged to the renminbi?
We argue that the renminbi is likely to become a major international currency
in the future, but the process will most likely be a gradual one, reflecting
the particular approach that the authorities in the Mainland have taken to
capital account liberalization. We also argue that Hong Kong is well
positioned to benefit from the process of the renminbi becoming an
international currency. At the same time, we continue to believe in the
appropriateness of the link of the Hong Kong dollar exchange rate to the U.S.
dollar. |