RMB Internationalization: What is in for Taiwan?

BBVA Working Paper 12/06

14 Pages Posted: 18 Apr 2013

See all articles by Alicia García-Herrero

Alicia García-Herrero

Bruegel; Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS); Natixis

Yingyi Tsai

National University of Kaohsiung

Le Xia

BBVA Research

Date Written: April 23, 2012

Abstract

Along with the steady pace of RMB internationalization, this paper proposes Taiwan as a potential candidate to become the next RMB offshore center. We review the main drivers behind Hong Kong’s success and set the reasons why Taiwan could follow such steps. First, Taiwan’s economic ties with China are substantial both in trade and FDI and they are set to be increasingly supported by the improved political relations across the Strait. Second, the relatively large size of Taiwan’s financial system, especially if we consider the enormous pool of savings in its investment and insurance companies, and its well-functioning infrastructure, should provide the necessary elements for an off-shore RMB market to develop. Finally, following Hong Kong’s experience, we offer some suggestions on possible pre-conditions for Taiwan to become the next RMB offshore center.

Keywords: RMB Internationalization, Offshore RMB market

JEL Classification: F33, F36, F42

Suggested Citation

Garcia-Herrero, Alicia and Tsai, Yingyi and Xia, Le, RMB Internationalization: What is in for Taiwan? (April 23, 2012). BBVA Working Paper 12/06, Available at SSRN: https://ssrn.com/abstract=2253108 or http://dx.doi.org/10.2139/ssrn.2253108

Alicia Garcia-Herrero (Contact Author)

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS) ( email )

IAS 2019, Lo Ka Chung Building,
Lee Shau Kee Campus, HKUST
Clear Water Bay, Kowloon
Hong Kong

Natixis ( email )

France

Yingyi Tsai

National University of Kaohsiung ( email )

Department of Applied Economics
700 Kaohsiung University Rd
Kaohsiung, 811
Taiwan
+886 7 5919189 (Phone)
+886 7 2169365 (Fax)

Le Xia

BBVA Research ( email )

10/F., Tower Two, IFC
Hong Kong
Hong Kong
85225823132 (Phone)
85225879717 (Fax)

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