Currency Internationalization, Payment Infrastructures and Central Banks: An Institutional Analysis of Renminbi Internationalization

What role do central banks play in designing cross-border payment infrastructure as part of a broader agenda of currency internationalization?

In a new journal article published in Research in International Business and Finance, Marina Zucker-Marques focuses on China’s experience from 2008 to 2023 to trace the evolution of the renminbi’s cross-border payment network, contrasting these developments with the early internationalization stages of the U.S. dollar.

Using primary data – including descriptive statistics and interviews with senior officials from the People’s Bank of China and staff from Chinese commercial banks – and triangulating information from secondary literature and official documents, she characterizes China’s strategy as ‘imitate and innovate.’

Her findings reveal that the renminbi’s payment network development mirrors, to some extent, the institutional frameworks underpinning the dollar’s global use. However, the comparison also exhibits notable differences in public sector involvement and pace of development indicating that, for late-industrializers, central bank plays a more pronounced role in jumpstarting a currency internationalization process.

The article also contributes to the international currency literature by demonstrating how payment infrastructures can aid in enhancing a country’s external resilience through currency internationalization, without necessitating the complete liberalization of the capital account.