Renminbi needs to be convertible to become global currency: RBI

**New Delhi:**China’s Renminbi should be freelyconvertible and its rate be market determined if it aspires tobecome world’s reserve currency, replacing the US dollar,Reserve Bank Governor D Subbarao said today.

He said that to be a global reserve currency it should be"freely convertible both of current and capital account …its exchange rate must be determined by market forces ofsupply and demand."

[caption id=“attachment_102153” align=“alignleft” width=“380” caption=“The RBI governor said that to be a global reserve currency, it should be"freely convertible both of current and capital account.Reuters”]  [/caption]

Subbarao said this during a discussion here on ‘Will theRenminbi eclipse the dollar?‘The aspiring global reserve currency should account forsignificant portion of global trade, he said.“Its (Chinese) financial markets must be open, deep androbust… and the policies of the country must inspire trustand confidence,” Subbarao said while giving details ofqualities desirable in any currency that wishes to replace USdollar.

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Moreover, the RBI chief further said that the issuingcountry should “accept the exceptional responsibility ofmaintaining sufficient liquidity in the country”.

Pointing out that India-China comparison has become anational obsession, Subbarao said, “for us in India, Chinameans many things - an object of envy, a challenge and theninspiration.”

Recalling the China’s rapid economic progress, Subbaraosaid the country has demonstrated what is possible to do.“To that extent China is an inspiration. The task for usin India is to match up to that record, or even surpass it,

but by doing it the Indian way,” he said.

PTI