A Study on RMB as an International Currency

This paper assesses the potential significance of the RMB as an international currency by drawing on the experiences of the other major currencies. Based on the work of Chinn and Jerrfey (2005), we first estimate an empirical relationship between currency shares of reserve holdings and main determinants. Using the empirical results we do a simulation about the potential share of the RMB in the total world reserves if it were to become fully convertible today under three different cases, the results suggest that the RMB's potential as a reserve currency would be very large.