M-RCBG Senior Fellow-Led Study Group: Longmei Zhang

Wednesday, September 27, 4:30-5:30pm
M-RCBG Conference Room (B-102)

 This study group will discuss the use of Renminbi (RMB) as an international payment currency. Despite China’s growing economic weight and close trade ties with the rest of the world, its financial integration remains limited, reflecting capital account restrictions. In this context, the international use of the RMB is minimal across multiple dimensions, including as a reserve currency, a payment currency, and a pricing currency. On the payment front, the RMB accounts for approximately  2 percent of cross-border transactions worldwide. However, the global aggregate masks significant regional variations. Based on country-level SWIFT transaction data,  this study group will examine the regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. In addition, it reflects the impact of policy measures by the People’s Bank of China, such as establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. The regional divergence in RMB usage, if it continues, will have profound implications for the future landscape of the international monetary system. 

Working Paper: Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of  Swap Lines and Offshore Clearing Banks

This study group / discussion is open to all. Registration is not necessary.

M-RCBG welcomes individuals with disabilities to participate in its programs. To request accommodations or ask questions about access provided, please email: mrcbg@hks.harvard.edu

Longmei Zhang headshot with plants in backgroundLongmei Zhang is a senior economist at the International Monetary Fund and served as the Citi Visiting Chair in International Finance at Schwarzman College, Tsinghua University, before joining M-RCBG. From 2017 to 2020, she served as the IMF Deputy Resident Representative for China. In this capacity, she provides policy advice, co-leads the analytical work of the IMF Beijing office, and engages with academia and think tanks. Before that, she worked in the IMF Asia and Pacific Department based in Washington, D.C., focusing on macroeconomic forecasting, broader China rebalancing, and issues on high savings. She has also worked extensively on regional issues in the Asia Pacific and was engaged in IMF program negotiations and reviews in Romania. Longmei has published research in a wide range of areas, including long-term growth/middle-income trap, macroprudential policies, corporate leverage, capital flows and asset prices, digital economy, and fintech. She also co-edited the book “The Future of China’s Bond market,” which provides a comprehensive analysis of various segments in China’s bond market and reform needed. She was named a Young Global Leader of the World Economic Forum in 2019 and is a member of the Global Future Council on China. She holds a Ph.D. in Economics from Goethe University Frankfurt, a master’s degree in international relations from the University of Konstanz, and a bachelor’s degree in business administration from Shanghai Jiaotong University. As an M-RCBG Senior Fellow, her research will focus on how China’s increasing financial integration and the rise of the Renminbi will reshape the international financial architecture and implications for policy makers. Her faculty sponsor is Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at Harvard Kennedy School. Email: longmei_zhang@hks.harvard.edu