Banks debate RMB internationalization

Editor's note: Several bank leaders met to discuss regional currency cooperation and RMB settlement at the recent Dianchi financial forum. Their speeches are featured here.

Wei Benhua, former deputy director, State Administration of Foreign Exchange

The most important reason Asia saw much less loss than America and Europe during the global economic crisis is that it has a good financial system. It is under strict supervision and has sufficient capital and good operating practices.

The huge amount of foreign reserves of Asian countries and regions also helped them weather the crisis. In 2009, Asia's economic entities' foreign reserves topped $5.2 trillion.

During the 1998 Asia financial crisis, we learned we need to establish a lender of last resort .

Several currency swap agreements were signed in 2000 between Asian countries to enhance their cooperation in lowering financial risks, but that is far from enough to combat the shock of a crisis from the outside.

In 2007, financial ministers of the Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea, decided to build the bilateral currency cooperation into a multi-lateral mechanism.

They called for a regional foreign reserve pool that requires member countries to provide a certain amount of capital to a country in need.

However, the capital in the pool is managed separately by each country. A unified supervision and management mechanism is not available. Whether the country in need can get financial aid in a timely manner is therefore in doubt.

Cheng Zhijun, deputy director-general, Ministry of Finance

The internationalization of a country's currency can increase its say in global economic affairs and lower the exchange rate risk. It can also promote the country's economic and trade development.