First Steps in the Globalization of the Yuan

Case – First Steps in the Globalization of the Yuan

1. How does the Chinese government limit the use of the Chinese currency, the RMB, on the global currency markets?

- The Chinese renminbi (RMB) or Yuan (CNY) is controlled by the Chinese government with all trading inside China (Mainland) between the (CNY) and other foreign currencies following the Chinese regulation that have been conducted by the Chinese government.

- (CNH) are the offshore of (RMB) that are traded outside of the mainland of China, mostly in Hong Kong and Macau. (CNY) are the onshore of (RMB) that usually use inside mainland of China. (CNY) and (CNH) are hardly to connect in the market. Besides, (CNY) can only be use inside the mainland and need China’s State Administration of Foreign Exchange (SAFE) approval before trading (CNY) with other currencies even Hong Kong (CNH)

2. What are the differences between the RMB, the CNY, the CNH and the CNY-NDFs?

- (CNY) - The onshore (RMB) that traded within mainland of China. (CNY) are controlled by the Chinese government with the Chinese Regulation. It is strictly high regulated market.

- (CNH) - The offshore (RMB) that usually traded outside of the mainland of China, Hong Kong and Macau. (CNH) exchange rate is floating against the world currencies.

- (CNY-NDFs) - non-deliverable forwards (NDFs), these are forward contracts whose value is determined by People’s Republic of China (PRC)-posted exchange value of the (CNY), but are non-deliverable, bring the means of they are settled in a currency like the euro, not the (CNY) itself.

3. Why was the McDonald’s bond issue so significant?

- McDonald’s is the first ever RMB bond by a nonfinancial non-Chinese firm in the global market. The bonds have been termed as Panda Bonds or The Dim Sum Bond Market.

-It’s signifying of new funding channel for international companies to gain working capital for China operation. Although small in size, roughly $30 million, the issue signify of what future...