Core Viewpoint - The structural imbalance between cross-border RMB flow and stock is a key constraint in the internationalization of the RMB, necessitating systemic reforms across cognition, systems, policies, and assessments to establish a virtuous cycle of "flow driving stock, stock feeding back flow" [1][9]. Structural Imbalance of Flow and Stock - As of the end of 2024, China's cross-border RMB settlement scale (flow) is projected to reach 96 trillion yuan, while offshore RMB deposits are only 3.5 trillion yuan, resulting in a flow-to-stock ratio of 27:1, significantly higher than the international level of 5:1 for the US dollar [1][2]. - The focus on flow metrics, which can be easily boosted through policy, leads to a neglect of stock metrics that require long-term market-driven asset allocation [2]. Systemic Risks from Imbalance - The reliance on flow expansion risks leaving the RMB as merely a "trade settlement tool," as offshore entities quickly convert RMB into other currencies due to a lack of diversified asset allocation channels [3]. - Insufficient stock leads to a weak offshore RMB asset pool, hindering innovation in financial products and reducing the attractiveness of the RMB as a reserve currency [3]. - The pursuit of flow growth through administrative means can create a "data prosperity" while the market remains weak, leading to unsustainable policy costs [3]. Root Causes of Imbalance - The "heavy flow, light stock" issue stems from governance inertia, cognitive biases, assessment flaws, and a lazy governance mentality [4]. Short-termism in Performance Metrics - The entrenched view equating RMB internationalization with the expansion of cross-border settlement scales reflects a distorted performance perspective, prioritizing easily measurable flow metrics over the more complex stock metrics [5]. Lack of Understanding of Market Dynamics - There is a failure to recognize the importance of market-driven mechanisms in the internationalization of the RMB, leading to fragmented policy tools and ineffective implementation [6]. Assessment System Bias - The current assessment system's excessive focus on cross-border RMB flow is a direct cause of the imbalance, with flow metrics receiving a 70% weight in assessments compared to only 30% for stock metrics [7]. Governance Inertia - The "heavy flow, light stock" mentality reflects a management laziness, where flow expansion is achieved through simple administrative measures rather than addressing deeper market needs [8]. Systemic Reform Proposals - To address the imbalance, reforms should focus on cognitive, institutional, policy, and assessment dimensions to create a new ecosystem for coordinated development of flow and stock [9]. Cognitive Innovation - There is a need to deepen the understanding of RMB internationalization and shift the focus from flow metrics to the quality and ecological aspects of development [10]. Institutional Design Breakthroughs - Legislative measures should be taken to ensure that flow and stock development are assessed together, with a minimum weight of 40% for stock metrics in evaluations [11]. Policy Tool Innovations - The approach should shift from a settlement-oriented to an asset-oriented focus, encouraging the retention of RMB in offshore markets [13]. Assessment System Reconstruction - New metrics should be introduced to evaluate the growth rate of offshore RMB stock, with significant weight in performance assessments for both government and financial institutions [15]. Risk Monitoring and Long-term Mechanisms - Establishing a monitoring system for offshore RMB stock risks and reducing direct administrative interventions in offshore markets are essential for fostering a sustainable ecosystem [16].