A Snapshot of Renminbi Internationalization Trends Under One Belt One Road Initiative
By Ann Marie Plubell and Siyao Liu, EMPEA Regulatory Affairs
In September 2013 China’s President Xi Jinping announced the “One Belt One Road Initiative” (OBOR). Under OBOR in 2014 the Silk Road Fund was established followed in 2015 by the Asian Infrastructure Investment Bank (AIIB). Both are intended to play significant roles in financing infrastructure projects in the sixty-eight countries along the revitalized silk roads. OBOR policy and investments are intended to contribute to increasing Chinese overseas investments and also to influence the selection of currency used in those transactions. In October 2016, the International Monetary Fund (IMF) officially added the renminbi to the basket of currencies that make up the Special Drawing Right (SDR). In May 2017, during the Belt and Road International Cooperation Forum held in Beijing, President Xi announced that in order to provide financial support to OBOR, China would inject additional RMB100 billion capital into Silk Road Fund and would encourage Chinese financial institutions to establish RMB denominated outbound investment funds with a total value of RMB 300 billion.
In July 2017 in furtherance of acceptance of the renminbi among other purposes, the China Development Bank entered into two renminbi denominated transactions with the Russian Direct Investment Fund announcing the establishment of an RMB68 billion investment co-operation fund and an RMB6 billion loan to support a fund for innovation. Both transactions are also intended to support expansion in infrastructure and encourage private investment and innovation across the Russian-Chinese border consistent with OBOR policy.