Logics of “Firm Currencies” and Chinese RMB Internationalization
Chen Shiyuan;Boloomberg L.P.;
The paper begins with a brief review of the history of currencies, concluding that fiat money of a country is always faced with competition of those of other countries. Then the paper advocates a pair of concepts of "firm currencies"and"soft currencies", which are defined by whether the public possesses long-term confidence in the currencies. "Firm currencies"enhance room for fi scal and monetary policies, and also lay solid foundation for the RMB internationalization. The paper calls for a"firm RMB"in the international monetary system, and proposes suggestions for monetary policy, exchange rate policy and capital account opening.