This paper is based on literature reviews on the concept of an international currency and its economic and political determinants, as well as China’s motivation for renminbi (RMB) internationalization by both Chinese and foreign scholars. The paper concentrates on the political economy explanation of the road map of RMB internationalization the Chinese government currently pursues. Beginning in 2009, the People’s Bank of China (PBoC) pushed RMB internationalization in a low-profile way through cross-border trade settlement, establishment of offshore RMB markets and swap agreements with other central banks, in spite of unfinished market-oriented reform on the exchange and interest rate, and a still strictly regulated capital account. The indirect and manageable approach toward RMB internationalization, in practice, leads to a de facto capital account liberalization.

CIGI Papers present in-depth analysis and discussion on governance-related subjects. They include policy papers that present CIGI experts' positions or contributions to policy debates, and background papers that contain research findings, insights and data that contribute to the development of policy positions.