A JOURNEY TO WHERE? : INTERNATIONALIZATION AND DIGITALIZATION OF THE RMB AND THE BELT AND ROAD INITIATIVE

Abstract

China, as the world's second-largest economy, contrasts its economic power with the modest international status of its currency, the renminbi (RMB). Despite the declining dominance of the U.S. dollar, the RMB lags behind the euro, pound sterling, and yen. The Belt and Road Initiative (BRI), launched in 2013, was anticipated to boost RMB internationalization through significant global infrastructure investments. Yet, a decade later, the RMB's global status remains limited. This study explores the BRI's impact on RMB internationalization, beginning from the post-2008 financial crisis period when efforts intensified. Utilizing recently collected comprehensive data, the research examines RMB flows domestically and internationally, finding minimal offshore net outflows. The study highlights China's strategic caution, balancing RMB inflow and outflow while prioritizing capital control, despite public rhetoric supporting RMB internationalization.