Issue Financial security strategy against the renminbi balloon effect

Summary

As rivalry over monetary hegemony intensifies, the report urges Korea to watch how the renminbi's growing reach affects domestic and international financial markets. Yuan settlement is rising globally and between Korea and China, and Chinese funds have surged into Korean bonds and equities as a spillover of US-China confrontation. The authors ask Korea to examine carefully how this balloon effect could affect its capital and financial markets and to prepare accordingly. They recommend stronger monitoring and a proactive financial security strategy in response to global currency competition. The concern is sharpened by fears that Chinese capital could be weaponised and by the diversification of Chinese investors into less transparent vehicles.