The RMB Internationalization Strategy and the Role of the e-CNY: An Analysis of the Potential and Challenges of the RMB/e-CNY as Reserve Currency in Reducing USD Dependence
Translated title
The RMB Internationalization Strategy and the Role of the e-CNY
Author
Krauss, Sonja
Term
4. term
Publication year
2023
Submitted on
2023-05-12
Pages
69
Abstract
This thesis examines why China is working to raise the global role of the renminbi RMB and how two paths support that goal: RMB internationalization wider use of the RMB in trade, finance, and reserves and the rollout of the e-CNY China's central bank digital currency. Guided by seven sub-questions, the study analyzes the drivers behind these efforts, their current state, the United States' response, the potential benefits and risks, and their implications for the global financial system and for the US dollar's status as the leading reserve currency. The core hypothesis is that China seeks to reduce its dependence on the US dollar while expanding its economic and geopolitical influence, and that the digital design of the e-CNY could offer advantages over traditional currencies that help advance this goal. The analysis uses a theoretical lens from International Political Economy, Structural Realism, and rise-and-fall theories of great powers, and applies a mixed-methods approach that combines qualitative deductive content analysis with descriptive quantitative analysis. The findings show a steady increase in China's efforts to internationalize the RMB despite recent financial and geopolitical headwinds. They also indicate that the e-CNY could function as a viable alternative to traditional currencies in some settings. Taken together, these developments strengthen the RMB internationalization strategy and could pose a potential challenge to the US dollar's dominance in the current international monetary system.
Denne afhandling undersøger, hvorfor Kina arbejder på at styrke renminbi RMBs globale rolle, og hvordan to spor understøtter dette mål: internationalisering af RMB bredere brug af RMB i handel, finans og valutareserver og udviklingen af e-CNY Kinas digitale centralbankvaluta. Styret af syv delspørgsmål analyserer studiet drivkræfterne, den aktuelle status, USA's respons, de mulige gevinster og risici samt de mulige konsekvenser for det globale finansielle system og for den amerikanske dollars rolle som førende reservevaluta. Kernehypotesen er, at Kina vil mindske sin afhængighed af dollaren og samtidig udvide sin økonomiske og geopolitiske indflydelse, og at e-CNYs digitale udformning kan give fordele i forhold til traditionelle valutaer, som kan bruges til at fremme målet. Analysen anvender et teoretisk afsæt i international politisk økonomi, strukturel realisme og teorier om stormagters opstigning og fald, samt en blandet metode der kombinerer kvalitativ deduktiv indholdsanalyse med kvantitativ beskrivende analyse. Resultaterne peger på en vedvarende stigning i Kinas bestræbelser på at internationalisere RMB trods nylige finansielle og geopolitiske modvinde. De indikerer også, at e-CNY kan fungere som et levedygtigt alternativ til traditionelle valutaer i visse sammenhænge. Samlet set styrker disse udviklinger strategien for internationalisering af RMB og kan udgøre en potentiel udfordring for dollarens dominans i det nuværende internationale monetære system.
[This apstract has been rewritten with the help of AI based on the project's original abstract]
Keywords
China ; USD ; RMB ; e-CNY ; Internationalization ; Digital Currency ; Reserve Currency ; Geopolitical ; Competition