Core Viewpoint - The article discusses the potential for the Chinese yuan (RMB) to become a "quasi-safe haven" currency amid increasing global economic uncertainties and the declining attractiveness of traditional safe-haven assets like the US dollar and US Treasury bonds [2][7]. Group 1: Current Financial Market Context - The complexity of China's financial market is partly due to the RMB not being fully convertible and capital controls still in place, which can deter foreign investment during periods of market volatility [1][15]. - The demand for foreign investment in China is increasing, but trade protectionism has led to a cautious international capital sentiment [1][8]. Group 2: Safe Haven Currency Characteristics - Safe haven currencies typically appreciate during global financial crises due to inflows of risk-averse capital, with historical examples including the Swiss franc and Japanese yen [4][5]. - The formation of a safe haven currency requires political stability, sound economic fundamentals, and a high degree of currency usability [5][6]. Group 3: RMB's Potential as a Quasi-Safe Haven Currency - The RMB has begun to exhibit characteristics of a quasi-safe haven currency, supported by China's substantial foreign exchange reserves and a consistent current account surplus [9][10]. - In 2024, foreign investment in RMB-denominated bonds increased significantly, indicating a growing perception of RMB assets as core international assets [10][12]. Group 4: Challenges to RMB's Safe Haven Status - Despite improvements, the RMB's global allocation remains low compared to traditional safe haven currencies, which limits its international appeal [12][15]. - The RMB's exchange rate stability and interest rate attractiveness are better than those of the yen and Swiss franc, but its global market presence is still underdeveloped [12][14]. Group 5: Policy Recommendations for Enhancing RMB's Safe Haven Status - To enhance the intrinsic value of RMB assets, China should focus on maintaining economic growth, managing potential risks, and ensuring policy transparency [17][18]. - Improving cross-border capital flow management and simplifying investment processes for foreign investors can attract more long-term capital [19][20]. - Expanding the offshore RMB market and increasing the variety of RMB-denominated financial products can enhance liquidity and attractiveness [20][21]. - Developing a robust RMB derivatives market will provide investors with necessary risk management tools [22]. - Promoting the use of RMB-denominated bonds as collateral in global markets can significantly enhance their liquidity and appeal [23]. - Engaging in international financial cooperation to establish the RMB's role in a multi-currency system can further solidify its status as a safe haven asset [24].