and become an international currency. This occurred in the course of economical
development in the USA, Japan and Germany. As the currency of the country
which enjoys surpluses becomes an international currency and is more adopted in
trade, it can boost the country’s trade since settlement in domestic currency is
beneficial for removing the exchange rate risk. In addition, the internationalization
of the RMB may also change, to some extent, the adverse situation in which
China’s trade surpluses are forced to be automatically converted into USD or into
other foreign exchange reserves. Thus, it is likely that the internationalization of the
RMB may become an important issue for China’s participation in international
financial governance. In order to push forward the internationalization of the RMB,
China will certainly further intensify reform of its domesticfinancial market,
gradually build a free, vibrantfinancial market, and create RMB investment space
to accommodate international investments. This also heralds that the Chinese
financial market will be more connected to internationalfinancial markets, and the
stability of the internationalfinancial market will attract more attention from China.
The conditions for China to participate in internationalfinancial governance will
become more optimized, and China’s subjective desire will increase. This means
that China will certainly participate in internationalfinancial governance more.
As China participates more in global financial governance, engagements
between China and the EU in globalfinancial governance will certainly greatly
increase. The Europeanfinancial industry still enjoys comparative advantages on
the globalfinancial market, and the EUR is also an international currency second
only to the USD, and there is a path towards dependence in globalfinancial gov-
ernance; therefore, the EU will still be an important participating and leading party
in globalfinancial governance for a considerably long time in the future. China will
inevitably have more engagements with the EU in globalfinancial governance.
Increasing China’s engagements with the EU presents both challenges and
opportunities for China. In terms of challenges, China will hold deeper consulta-
tions with the EU on more issues, and possible interest conflicts and disagreements
will also increase; furthermore, as there are more and more participants in global
financial governance since the globalfinancial crisis, the structure of power dis-
tribution will also be adjusted, giving rise to conflicts. With respect to opportunities,
China will need to draw upon more governance experience in future globalfinancial
governance, while the EU possesses precisely this. Meanwhile, both China and the
EU are promoters of a reform of the international monetary system. The interna-
tionalization of the RMB concentrates more in China’s neighboring regions, while
the influence of the EUR also occurs within the Eurozone and regions adjacent to it,
thus the impact of the path towards the internationalization of the RMB on the
Eurozone is not irreconcilable. Meanwhile, the internationalization of the RMB will
bring new opportunities for the EU to developfinancial business. Given effects
from non-economic factors, it is likely that the USA will not be the important
market for the internationalization of the RMB; however, in view of the gigantic US
economy, RMB business will inevitably be linked to the USA. As the EU has a
traditional historical connection with the USA, a colossal economy and a relatively
high level of development offinancial business, the European market is very likely
152 X. Hou