Beware of capital account liberalization

Haste is accompanied by a greater risk of unintended consequences

The International Monetary Fund is going to reevaluate the currency basket of Special Drawing Rights this year, and one of the options is to include the renminbi in the basket. Christine Lagarde, president of the IMF, says China should further speed up the capital account liberalization to achieve this goal.

In March, during the annual sessions of the National People's Congress, the State legislature, and the advisory Chinese People's Political Consultative Conference, a leader of the People's Bank of China reaffirmed that China would essentially realize the goal of the capital account liberalization by the end of this year.