This chapter answers these questions by performing a political analysis of the motivation behind the internationalization process, and the road map being used to achieve it. It discusses how RMB internationalization originated from the idea of China’s rise within the international monetary system. Further, Chinese leaders were worried following the 2008 global financial crisis (GFC) about China’s excessive dependence on the US dollar. In practice, this worry evolved into a process to push domestic financial reform aimed at liberalizing the capital account, market-based interest rate and exchange rates.

This chapter first reviews the literature on the concept of an international currency and its economic and political determinants, and then examines motivations for RMB internationalization. Second, it explores the connection between RMB internationalization and China’s rise in international financial markets. Third, it focuses on the political considerations embodied in the actual internationalization process, including the role of domestic financial reform in transforming China’s economic development model from export and investment driven to consumption driven, as well as the opponents and supporters for the reforms.