Renminbi
人民币 (Chinese)
Renminbi banknotes of the 2005 series Renminbi banknotes of the 2005 series
ISO 4217 code	CNY
Central bank	People's Bank of China
Website	www.pbc.gov.cn
Official user(s)	China
Unofficial user(s)	Mongolia[1][2][3]  North Korea (until Nov 2009)[2]  Burma (in Kokang and Wa)
Inflation	5.4%
Source	The World Factbook, 2011 est.
Pegged with	Partially, to a basket of trade-weighted international currencies
Subunit
1	yuán (元,圓)
1/10	jiǎo (角)
1/100	fēn (分)
Symbol	¥
Nickname	none
yuán (元,圓)	kuài (块)
jiǎo (角)	máo (毛)
Plural	The language(s) of this currency does not have a morphological plural distinction.
Coins
Freq. used	¥0.1, ¥0.5, ¥1
Rarely used	¥0.01, ¥0.02, ¥0.05
Banknotes
Freq. used	¥1, ¥5, ¥10, ¥20, ¥50, ¥100
Rarely used	¥0.1, ¥0.2, ¥0.5, ¥2

This article contains Chinese text. Without proper rendering support, you may see question marks, boxes, or other symbols instead of Chinese characters.

The Renminbi (RMB, sign: ¥; code: CNY; also CN¥, 元 and CN元) is the official currency of China (People's Republic of China). Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of China.^[4] Its name (simplified Chinese: 人民币; traditional Chinese: 人民幣; pinyin: rénmínbì) means "people's currency".

The primary unit of renminbi is the yuán (元). One yuan is subdivided into 10 jiǎo (角), which in turn is subdivided into 10 fēn (分). Renminbi banknotes are available in denominations from 1 jiao to 100 yuan (¥0.1–100) and coins have denominations from 1 fen to 1 yuan (¥0.01–1). Thus, some denominations exist in coins and banknotes, but they are usually used in coins if under ¥1. Coins under ¥0.1 are used infrequently.

Through most of its history, the value of the renminbi was pegged to the U.S. dollar. As China pursued its gradual transition from central planning to a market economy, and increased its participation in foreign trade, the renminbi was devalued to increase the competitiveness of Chinese industry. It has been claimed that the current official exchange rate is lower than the value of the renminbi by purchasing power parity, undervalued by as much as 37.5% (see below).^[5]

Since 2005, the renminbi exchange rate has been allowed to float in a narrow margin around a fixed base rate determined with reference to a basket of world currencies. The Chinese government has announced that it will gradually increase the flexibility of the exchange rate. China has initiated various pilot projects to "internationalize" the RMB in the hope that it will become a reserve currency over the long term.^[6][7]

Etymology[link]

A variety of currencies circulated in China during the Republic of China (ROC) era, most of which were denominated in the unit "yuán" (pronounced [jʏɛn˧˥]). Each was distinguished by a currency name, such as the fabi ("legal tender"), the "gold yuan", and the "silver yuan". The word yuan (written as 元 (informally) or 圓 (formally)) in Chinese literally means round, after the shape of the coins.^[8] The Korean and Japanese currency units, won and yen respectively, are cognates of the yuan and have the same Chinese character (hanja/kanji) representation, but in different forms (respectively, 원/圓 and 円/圓), also meaning round in Korean and Japanese. However, they do not share the same names for the subdivisions. The principal unit of New Taiwan dollar, used in Taiwan as the currency of the Republic of China, is also referred to in the Chinese language as "yuán" (written as 元 or 圓).

As the Communist Party of China took control of ever larger territories in the latter part of the Chinese Civil War, its People's Bank of China began in 1948 to issue a unified currency for use in Communist-controlled territories. Also denominated in yuan, this currency was identified by different names, including "People's Bank of China banknotes" (simplified Chinese: 中国人民银行钞票; traditional Chinese: 中國人民銀行鈔票; from November 1948), "New Currency" (simplified Chinese: 新币; traditional Chinese: 新幣; from December 1948), "People's Bank of China notes" (simplified Chinese: 中国人民银行券; traditional Chinese: 中國人民銀行券; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or "renminbi", from June 1949.^[9]

Production and minting[link]

Renminbi currency production is carried out by a state owned corporation, China Banknote Printing and Minting (CBPMC; 中国印钞造币总公司) headquartered in Beijing.^[10] CBPMC uses several printing and engraving and minting facilities around the country to produce banknotes and coins for subsequent distribution. Banknote printing facilities are based in Beijing, Shanghai, Chengdu, Xi'an, Shijiazhuang, and Nanchang. Mints are located in Nanjing, Shanghai, and Shenyang. Also, high grade paper for the banknotes is produced at two facilities in Baoding and Kunshan. The Baoding facility is the largest facility in the world dedicated to developing banknote material according to its website.^[11] In addition, the People's Bank of China has its own printing technology research division that researches new techniques for creating banknotes and making counterfeiting more difficult.

First series[link]

The first series of renminbi banknotes was introduced by the People's Bank of China in December 1948, about a year before the establishment of the People's Republic of China. It was issued only in paper money form and replaced the various currencies circulating in the areas controlled by the communists. One of the first tasks of the new government was to end the hyperinflation that had plagued China in the final years of the Kuomintang (KMT) era. That achieved, a revaluation occurred in 1955, at the rate of 1 new yuan = 10,000 old yuan.

Banknotes[link]

On December 1, 1948, the newly founded People's Bank of China introduced notes in denominations of 1, 5, 10, 20, 50, 100 and 1000 yuan. Notes for 200, 500, 5000 and 10,000 yuan followed in 1949, with 50,000 yuan notes added in 1950. A total of 62 different designs were issued. The notes were officially withdrawn on various dates between April 1 and May 10, 1955.

These first renminbi notes were printed with the words "People's Bank of China", "Republic of China", and the denomination, written in Chinese characters by Dong Biwu.^[12]

The name "renminbi" was first recorded as an official name in June 1949. After work began in 1950 to design the second series of the renminbi, the previous series were retroactively dubbed the "first series of the renminbi".^[9]

Second to fifth series[link]

The second series of renminbi banknotes was introduced in 1955. During the era of the command economy, the value of the renminbi was set to unrealistic values in exchange with western currency and severe currency exchange rules were put in place. With the opening of the mainland Chinese economy in 1978, a dual-track currency system was instituted, with renminbi usable only domestically, and with foreigners forced to use foreign exchange certificates. The unrealistic levels at which exchange rates were pegged led to a strong black market in currency transactions.

In the late 1980s and early 1990s, China worked to make the RMB more convertible. Through the use of swap centres, the exchange rate was brought to realistic levels and the dual track currency system was abolished.

The renminbi is convertible on current accounts but not capital accounts. The ultimate goal has been to make the RMB fully convertible. However, partly in response to the Asian financial crisis in 1998, China has been concerned that the mainland Chinese financial system would not be able to handle the potential rapid cross-border movements of hot money, and as a result, as of 2012, the currency trades within a narrow band specified by the Chinese central government.

The fen and jiao have become increasingly unnecessary as prices have increased. Chinese retailers tend to avoid decimal values (such as ¥9.99), opting instead for integer values of yuan (such as ¥9 or ¥10).^[13]

Coins[link]

In 1955, aluminium 1, 2 and 5 fen coins were introduced. In 1980, brass 1, 2, and 5 jiao and cupro-nickel 1 yuan coins were added, although the 1 and 2 jiao were only produced until 1981, with the last 5 jiao and 1 yuan issued in 1985. In 1991, a new coinage was introduced, consisting of an aluminium 1 jiao, brass 5 jiao and nickel-clad-steel 1 yuan. Issuance of the 1 and 2 fen coins ceased in 1991, with that of the 5 fen halting a year later.^{[citation needed]} The small coins were still made for annual mint sets, and from the beginning of 2005 again for general circulation. New designs of the 1 and 5 jiao and 1 yuan were introduced in between 1999 and 2002. The frequency of usage of coins varies between different parts of China.

Banknotes[link]

In 1955, notes (dated 1953), were introduced in denominations of 1, 2 and 5 fen, 1, 2 and 5 jiao, and 1, 2, 3, 5 and 10 yuan. Except for the three fen denominations and the 3 yuan, notes in these denominations continue to circulate, with 50 and 100 yuan notes added in 1980 and 20 yuan notes added in or after 1999.

The denomination of each banknote is printed in Chinese. The numbers themselves are printed in financial Chinese numeral characters, as well as Arabic numerals. The denomination and the words "People's Bank of China" are also printed in Mongolian, Tibetan, Uyghur and Zhuang on the back of each banknote, in addition to the boldface Hanyu Pinyin "Zhongguo Renmin Yinhang" (without tones). The right front of the note has a tactile representation of the denomination in Chinese braille starting from the fourth series.

Second series[link]

The second series of renminbi banknotes (the first having been issued for the previous currency) was introduced on 1 March 1955. Each note has the words "People's Bank of China" as well as the denomination in the Uyghur, Tibetan, Mongolian and Zhuang languages on the back, which has since appeared in each series of renminbi notes. The denominations available in banknotes were ¥0.01, ¥0.02, ¥0.05, ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥3, ¥5 and ¥10.

Third series[link]

The third series of renminbi banknotes was introduced on April 15, 1962. For the next two decades, the second and third series banknotes were used concurrently. The denominations were of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5 and ¥10. The third series was phased out during the 1990s and then was recalled completely on July 1, 2000.

Fourth series[link]

The fourth series was introduced between 1987 and 1997, although the banknotes were dated 1980, 1990, or 1996. They are still legal tender. Banknotes are available in denominations of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10, ¥50 and ¥100.

Fifth series[link]

In 1999, a new series of renminbi banknotes and coins was progressively introduced. The fifth series consists of banknotes for ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. Significantly, the fifth series uses the portrait of Mao Zedong on all banknotes, in place of the various leaders and workers which had been featured previously.

Commemorative designs[link]

In 1999, a commemorative red ¥50 note was issued in honor of the 50th anniversary of the establishment of the People's Republic of China. This note features Mao Zedong on the front and various animals on the back.

An orange polymer note, and so far, China's only polymer note, commemorating the new millennium was issued in 2000 with a face value of ¥100. This features a dragon on the obverse and the reverse features the China Millennium monument (Center for cultural and scientific fairs).

For the 2008 Beijing Olympics, a green ¥10 note was issued featuring the Bird's Nest on the front with the back showing a classical Olympic discus thrower and various other athletes.

Suggested future design[link]

On March 13, 2006, some delegates to an advisory body at the National People's Congress proposed to include Sun Yat-sen and Deng Xiaoping on the renminbi banknotes. However, the proposal was not adopted.^[14]

International use[link]

International trade[link]

Before 2009, the Chinese renminbi had little to no exposure in the international markets because of strict government controls by the central Chinese government that prohibited almost all forms of yuan holdings or transactions. Transactions between Chinese companies and a foreign entity would have to be denominated in US dollars. With Chinese companies unable to hold US dollars and foreign companies unable to hold Chinese yuan, all transactions would go through the People's Bank of China. Once the sum was paid by the foreign party in dollars, the central bank would pass the settlement in renminbi to the Chinese company. In June 2009 the Chinese officials announced a pilot scheme where business and trade transactions were allowed between limited businesses in Guangdong and Shanghai municipalities and only counterparties in Hong Kong, Macau, and select ASEAN nations. Proving a success,^{[citation needed]} the program was further extended to 20 Chinese provinces and counterparties internationally in July 2010, and in September 2011 it was announced that the remaining 11 Chinese provinces would be included.

In steps intended to establish the renminbi as an international reserve currency, China has agreements with Russia, Vietnam, and Thailand allowing trade with those countries to be settled directly in renminbi instead of requiring conversion to US dollars.^[15]

International reserve currency[link]

Currency restrictions regarding renminbi denominated bank deposits and financial products were greatly liberalized in July, 2010.^[16] In 2010 renminbi denominated bonds were reported to have been purchased by Malaysia's central bank^[17] and that McDonald's had issued renmimbi denominated corporate bonds through Standard Chartered Bank of Hong Kong.^[18] Such liberalization allows the yuan to look more attractive as it can be held with higher return on investment yields, whereas previously that yield was virtually none. Nevertheless, some national banks such as Bank of Thailand (BOT) have expressed a serious concern about RMB since BOT cannot substitute the depreciated US Dollars in the 200 billion dollar Foreign Exchange Reserves held by BOT with Renminbi Yuan as much as BOT wishes because:

1. The Chinese Government has not taken the full responsibilities and commitments on the economic affairs at the global levels.
2. Renminbi Yuan still has not become well-liquidated (fully convertible) yet.
3. The Chinese government still lacks deep and wide vision about how to perform fund-raising to handle international loans at global levels.^[19]

However HSBC expects the Renminbi to become the third major reserve currency in 2011.^[20]

Countries that are left-leaning in the political spectrum have also begun to use the Renminbi as an alternative reserve currency to the United States dollar; the Chilean central bank reported in 2011 to have US$91 million worth of Renminbi in reserves, and the president of the central bank of Venezuela, Nelson Merentes, made statements in favour of the Renminbi following the announcement of reserve withdrawals from Europe and the United States.^[21]

Use as a currency outside mainland China[link]

The two special administrative regions, Hong Kong and Macau, have their own respective currencies, according to the "one country, two systems" principle and the basic laws of the two territories.^[22][23] Therefore, the Hong Kong dollar and the Macanese pataca remain the legal tenders in the two territories, and renminbi, although sometimes accepted, is not legal tender. Banks in Hong Kong allow people to maintain accounts in RMB.^[24] Because of changes in legislation in July 2010, many banks around the world^[25] are now slowly offering individuals the chance to hold deposits in Chinese renminbi.

The RMB had a presence in Macau even before the 1999 return to the People's Republic of China from Portugal. Banks in Macau can issue credit cards based on the renminbi but not loans. Renminbi based credit cards cannot be used in Macau's casinos.^[26]

The Republic of China, which governs Taiwan, believes wide usage of the renminbi would create an underground economy and undermine its sovereignty.^[27] Tourists are allowed to bring in up to 20,000 renminbi when visiting Taiwan. These renminbi must be converted to the New Taiwan dollar at trial exchange sites in Matsu and Kinmen.^[28] The Chen Shui-bian administration insisted that it would not allow full convertibility until the mainland signs a bilateral foreign exchange settlement agreement,^[29] though president Ma Ying-jeou has pledged to allow full convertibility as soon as possible.

The renminbi is circulated in some of China's neighbors, such as Pakistan, Mongolia^[2][3] and northern part of Thailand.^[30][31] Cambodia welcomes the renminbi as an official currency and Laos and Myanmar allow it in border provinces.^[2] Though unofficial,^{[clarification needed]} Vietnam recognizes the exchange of the renminbi to the đồng.^[2]

April 2011: In Hong Kong, the Chinese property investment trust, Hui Xian has raised Rmb10.48 billion ($1.6 billion) in the first Initial Public Offering with denomination in Renminbi. Beijing has allowed renminbi-denominated financial markets to develop in Hong Kong because the central Chinese government wants to increase the usage of renminbi in international market and consequently reduce the use of the US dollar.^[32]

Since 2007, RMB-nominated bonds are issued outside the Mainland China; these are called "dim sum bonds".

CNH[link]

While the CNY is the RMB which is traded both onshore in China, and offshore (primarily in Hong Kong) are the same currency, they trade at different rates. This is by design: as regulation has explicitly kept onshore and offshore separated, the respective supply and demand conditions lead to separate market clearing exchange rates. Hence the emergence of a new currency code, CNH, to represent the exchange rate of RMB that trades offshore in Hong Kong. However, it does not end here. There is the traditional offshore RMB market, the dollar settled non-deliverable forward (NDF), which itself trades independently of either onshore CNY or offshore CNH, as well as a trade-settlement exchange rate (sometimes called CNT) to which offshore corporates have access, just to add to the complexity.

This article or section may have been copied and pasted from http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=UHa14N6Tu3&n=282753.PDF (Duplication Detector report), possibly in violation of Wikipedia's copyright policy. Please remedy this by editing this article to remove any non-free copyrighted content and attributing free content correctly, or flagging the content for deletion. (May 2012)

Value[link]

1 RMB to US dollar, since 1981

For most of its early history, the RMB was pegged to the U.S. dollar at 2.46 yuan per USD (note: during the 1970s, it was appreciated until it reached 1.50 yuan per USD in 1980). When China's economy gradually opened in the 1980s, the RMB was devalued in order to improve the competitiveness of Chinese exports. Thus, the official USD to RMB exchange rate declined from 1.50 yuan in 1980 to 8.62 yuan by 1994 (lowest ever on the record). Improving current account balance during the latter half of the 1990s enabled the Chinese government to maintain a peg of 8.27 yuan per USD from 1997 to 2005.

As of August 30, 2011, yuan's exchange rate at 6.38 to the U.S. dollar—its highest official level since a currency revaluation in 2005.^[33] China's leaders raised the yuan to tame inflation, a step U.S. officials have pushed for years to help repair the massive trade deficit with China.^[33]

Depegged from the U.S. dollar[link]

On July 21, 2005, the peg was finally lifted, which saw an immediate one-off RMB revaluation to 8.11 per USD.^[34] The exchange rate against the euro stood at 10.07060 yuan per euro.

However the peg was reinstituted unofficially when the financial crisis hit: "Under intense pressure from Washington, China took small steps to allow its currency to strengthen for three years starting in July 2005. But China 're-pegged' its currency to the dollar as the financial crisis intensified in July 2008."^[35]

On June 19, 2010, the People’s Bank of China released a statement simultaneously in Chinese and English indicating that they would "proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility."^[36] The news was greeted with praise by world leaders including Barack Obama, Nicolas Sarkozy and Stephen Harper.^[37] The PBoC maintained there would be no "large swings" in the currency. The RMB rose to its highest level in five years and markets worldwide surged on Monday, June 21 following China's announcement.^[38]

China has shifted some of their reserves from dollar accounts to accounts in their competitor nations,^{[citation needed]} leading these other nations to invest in dollars to keep their own currencies down.^{[citation needed][39]}

Managed float[link]

The RMB is now moved to a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The daily trading price of the U.S. dollar against the RMB in the inter-bank foreign exchange market would be allowed to float within a narrow band of 0.3% around the central parity published by the People's Bank of China (PBC); in a later announcement published on May 18, 2007, the band was extended to 0.5%.^[40] China has stated that the basket is dominated by the United States dollar, Euro, Japanese yen and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar.^[41]

On April 10, 2008, it traded at 6.9920 yuan per US dollar, which was the first time in more than a decade that a dollar had bought less than seven yuan,^[42] and at 11.03630 yuan per euro.

Beginning in January 2010, Chinese and non-Chinese citizens have an annual exchange limit of a maximum of 50,000 USD. Exchange will only proceed if the applicant appears in person at the relevant bank and presents his passport or his Chinese ID; these deals are being centrally registered. The maximum withdrawal is 10,000 USD per day, the maximum purchase limit of USD is 500 per day. This stringent management of the currency leads to a bottled-up demand for exchange in both directions. It is viewed as a major tool to keep the currency peg, preventing inflows of 'hot money'.

A shift of Chinese reserves into the currencies of their other trading partners has caused these nations to shift more of their reserves into dollars, leading to no great change in the value of the Renminbi against the dollar.^[43]

Futures market[link]

Renminbi futures are traded at the Chicago Mercantile Exchange. The futures are cash-settled at the exchange rate published by the People's Bank of China.^[44]

Purchasing power parity[link]

Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power parity analysis. One recent study suggests 37.5% undervaluation.^[5]

• The World Bank estimated that, by purchasing power parity, one International dollar was equivalent to approximately RMB1.9 in 2004.^[45]
• The International Monetary Fund estimated that, by purchasing power parity, one United States dollar was equivalent to approximately RMB3.462 in 2006, RMB3.621 in 2007, RMB3.798 in 2008, RMB3.872 in 2009, and RMB3.922 in 2010.^[46]

See also[link]

• China Banknote Printing and Minting Corporation (CBPMC)
• Chinese lunar coins
• Economy of the People's Republic of China
• List of Renminbi exchange rates

References[link]

Further reading[link]

External links[link]

• Stephen Mulvey, 26 June 2010, Why China's currency has two names - BBC News
• Photographs of all Chinese currency and sound of pronunciation in Chinese

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Barry Eichengreen

Born	1952 (age 59–60)
Nationality	United States
Institution	University of California, Berkeley
Field	Political economics
Alma mater	Yale University UC Santa Cruz
Influenced	Marcel Fratzscher
Information at IDEAS/RePEc

Barry Eichengreen (born 1952) is an American economist who holds the title of George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley, where he has taught since 1987. Eichengreen's mother is Lucille Eichengreen, a Holocaust survivor and author.

He has done research and published widely on the history and current operation of the international monetary and financial system. He received his BA from UC Santa Cruz and his Ph.D. from Yale University in 1979. He was a senior policy advisor to the International Monetary Fund in 1997 and 1998, although he has since been critical of the IMF.

His best known work is the book Golden Fetters: The Gold Standard and the Great Depression, 1919-1939, Oxford University Press, 1992. In his own book on the Great Depression, Ben Bernanke summarized Eichengreen's thesis as follows:

... [T]he proximate cause of the world depression was a structurally flawed and poorly managed international gold standard... For a variety of reasons, including among others a desire of the Federal Reserve to curb the US stock market boom, monetary policy in several major countries turned contractionary in the late 1920's—a contraction that was transmitted worldwide by the gold standard. What was initially a mild deflationary process began to snowball when the banking and currency crises of 1931 instigated an international "scramble for gold". Sterilization of gold inflows by surplus countries [the USA and France], substitution of gold for foreign exchange reserves, and runs on commercial banks all led to increases in the gold backing of money, and consequently to sharp unintended declines in national money supplies. Monetary contractions in turn were strongly associated with falling prices, output and employment. Effective international cooperation could in principle have permitted a worldwide monetary expansion despite gold standard constraints, but disputes over World War I reparations and war debts, and the insularity and inexperience of the Federal Reserve, among other factors, prevented this outcome. As a result, individual countries were able to escape the deflationary vortex only by unilaterally abandoning the gold standard and re-establishing domestic monetary stability, a process that dragged on in a halting and uncoordinated manner until France and the other Gold Bloc countries finally left gold in 1936.

The main evidence Eichengreen adduces in support of this view is the fact that countries that abandoned the gold standard earlier saw their economies recover more quickly.

His recent books include Global Imbalances and the Lessons of Bretton Woods, MIT Press, September 2006 and The European Economy Since 1945: Co-ordinated Capitalism and Beyond, Princeton University Press, 2007

His most recent work is Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, Oxford University Press, 2011 Web Site

He has been President of the Economic History Association (2010-2011).

Publications[link]

• Elusive Stability: Essays in the History of International Finance 1919-1939. Cambridge University Press, 1990 ISBN 0-521-36538-4
• Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. Oxford University Press, 1992, ISBN 0-19-510113-8
• International Monetary Arrangements for the 21st Century. Brookings Institution Press, 1994, ISBN 0-8157-2276-1
• Reconstructing Europe’s Trade and Payments: The European Payments Union. University of Michigan Press, 1994, ISBN 0-472-10528-0
• Globalizing Capital: A History of the International Monetary System. Princeton University Press, 1996, ISBN 0-691-02880-X; 2. Auflage ebd. 2008, ISBN 0-691-13937-7
  • Vom Goldstandard zum EURO. Die Geschichte des internationalen Währungssystems. Wagenbach, Berlin 2000, ISBN 3-8031-3603-2
• European Monetary Unification: Theory, Practice, Analysis. The MIT Press, 1997 ISBN 0-262-05054-4
• with José De Gregorio, Takatoshi Ito & Charles Wyplosz: An Independent and Accountable IMF. Centre for Economic Policy Research, 1999, ISBN 1-898128-45-6
• Toward A New International Financial Architecture: A Practical Post-Asia Agenda. Institute for International Economics, 1999, ISBN 0-88132-270-9
• Financial Crises and What to Do About Them. Oxford University Press, 2002, ISBN 0-19-925743-4
• with Erik Berglöf, Gérard Roland, Guido Tabellini & Charles Wyplosz: Built to Last: A Political Architecture for Europe. CEPR, 2003, ISBN 1-898128-64-2
• Capital Flows and Crises. The MIT Press, 2004, ISBN 0-262-55059-8
• Global Imbalances and the Lessons of Bretton Woods. The MIT Press, 2006, ISBN 0-262-05084-6
• The European Economy Since 1945: Co-ordinated Capitalism and Beyond. Princeton University Press, 2008, ISBN 0-691-13848-6
• Exorbitant Privilege, Oxford University Press, New York 2010 ISBN 978-0-19-975378-9

External links[link]

• Barry Eichengreen at the University of California at Berkeley
• Column archive at Project Syndicate
• Column archive at The Guardian
• Barry Eichengreen at The Economist
• Appearances on C-SPAN
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• Barry Eichengreen in the Editorial Board of Financial History Review

The Honourable Joseph Yam Chi-kwong, GBM, GBS, CBE, JP born 1947 in Hong Kong with family roots in Changping Town, Dongguan, Guangdong^[1]) is a Hong Kong statistician, economist and civil servant. Yam was the Chief Executive of the Hong Kong Monetary Authority (HKMA) from April 1993 to 1 October 2009.

Biography[link]

Yam graduated from the University of Hong Kong. He joined the Government of Hong Kong as a statistician in 1971, and became an economist in 1976. In 1982, he was appointed Principal Assistant Secretary for Monetary Affairs.^[2] In 1983, Yam helped formulate the peg between the Hong Kong dollar and US dollar.^[3] He was appointed Deputy Secretary for Monetary Affairs in 1985 and Director of the Office of the Exchange Fund in 1991.^[2] When the Office of the Exchange Fund merged with Office of the Commissioner of Banking in 1993, he became the Chief Executive of the Hong Kong Monetary Authority.

Tenure as Chief Executive of HKMA[link]

In 1995, the Hong Kong Institute of Bankers voted him 'Banker of the Year'.^{[citation needed]}

Despite a study conducted by S. K. Tsang, a Professor of Economics in Hong Kong Baptist University, indicating there were weaknesses of the HKD-USA exchange rate peg system^[4] during the 1997 Asian Financial Crisis, Yam did not amend the narrow-based peg. Instead, he defended the Hong Kong dollar by pushing up interest rates – he pushed the overnight Interbank rates up to 280% on 23 October 1997.^[5]

In an audacious move, the HKMA also bought US$15 billion in stocks amidst the market panic in 1998. The measure restored calm, and consequently succeeded to defend the Hong Kong fixed exchange rate parity against the US dollar. The move was initially criticised by, amongst others, Alan Greenspan, who voiced concern in September 1998 that the strategy would fail and erode the credibility of the HKMA.^[6] "It turned out that his timing was exquisite," Greenspan later said. "It was a risky action [which]... I wouldn’t recommend as a general rule for central banks."^[6]

In 2007, Yam was the highest paid central banker in the world, with an annual salary of US$1.32 million, about seven times that of the Chairman of the Federal Reserve ($191,300).,^[7] and approximately three times that of the President of the European Central Bank (EUR 351,816 in 2008), the Governor of the Bank of England (GBP 290,000 in 2008) and the Governor of the Bank of Japan ($370,000 in 2007)^[8]

In 2008, he was summoned by the a subcommittee of Legislative Council of Hong Kong in a hearing regarding issues arising from Lehman Brothers-related Minibonds and structured financial products^[9]

Convergence plan[link]

Noticing the pricing differential between shares listed on both the local market (H-shares) and the Shanghai Stock Exchange (A-shares), Yam pushed for mechanisms to promoter greater convergence and arbitrage. Ignoring major obstacles pointed out by local brokers, he is credited with persuading the Government to take a 5.9% stake in the Hong Kong Stock Exchange as leverage, and then pushing the program^[10] which allowed mainland individuals to buy Hong Kong securities directly by opening foreign-currency accounts at the Bank of China branch in northern Tianjin. The scheme was announced by the State Administration of Foreign Exchange on 20 August 2007,^[11][12] but stalled at the starting gate, when Beijing refused to grant permission.^[13]

Retirement[link]

Joseph Yam, regarded as one of the territory's most powerful officials and described as "one of the best paid and the longest serving central bank chiefs in the world", ^[3] confirmed on 19 May 2009 his plan for retirement, after serving in the post for 16 years.^[3] When it was originally announced in October 2007 that he would retire on 1 October 2009, financial columnist Jake van der Kamp linked Yam's departure with his handling of the A-share and H-share plans which destabilised Hong Kong's economy.^[10] However, Sir Donald Tsang described Yam as "Comrade in arm who acted in concert with the government in 1998 to overcome the Asian financial turmoil and under the present financial tsunami, Hong Kong's banking system has remained stable."^[3] In retirement, Yam will become an honorary consultant of the People's Bank of China.^[3]