This year marks the 10th anniversary of the international financial crisis. For years, the international community has been reflecting the causes of the financial crisis to prevent a recurrence. The crisis exposed the inherent defects of the international currency system -- the US dollar accounts for an excessive proportion of international reserve currencies, resulting to over-centralized risks of the international financial system. Therefore, there is an urgent need to establish a diversified international currency system. However, it has been 10 years since the crisis and the dollar-dominated international currency system has not fundamentally changed.

At present, China is the second largest economy in the world, but the renminbi (RMB) plays a minor role in the international currency system, which is not commensurate with the international status of China's economy. On Oct 1, 2016, the International Monetary Fund included the RMB into the Special Drawing Rights (SDRs) currency basket with a 10.92 percent weighting in the basket. It signals the international community's expectation on the RMB playing a greater role in the international monetary system. In other words, the international community hopes the RMB will assume more international responsibilities.

However, the process of RMB internationalization has been slow in the past two years. According to the statistics from the Bank for International Settlements, as of the end of 2017, the US dollar ranked first in international settlement with a market share of 39.9 percent, and the euro ranked second with 35.7 percent, followed by the pound sterling at 7.1 percent, the Japanese yen 2.9 percent and the RMB 1.6 percent. In sharp contrast to the role of RMB, China's GDP accounts for about 15 percent of the world’s total, and China's foreign trade volume accounts for 13 percent of the world's total.

In terms of financial transactions, the balance of global debt financing in 2016 exceeded $21 trillion, of which 39.5 percent was issued in US dollar as financing instruments and 32.1 percent in euro, the pound coming third. The international bond balance of RMB was $100.83 billion, accounting for merely 0.5 percent of the world’s total, lower than the Swiss franc, Canadian dollar and Australian dollar.

What is inspiring is that more and more central banks or national treasury departments have begun to hold the RMB in recent years. For example, on June 13, 2017, the European Central Bank announced that it was investing in RMB-dominated assets worth of 500 million euros as reserve. However, the proportion of RMB in global reserve assets is only about 1 percent, and there is still a large gap to the proportion of RMB in SDRs currency basket.

In recent years, China has expanded its financial liberalization and facilitated RMB internationalization. On May 2, 2018, the RMB Cross-border Interbank Payment System (CIPS) (Phase II) was fully put into use. The CIPS provides clearing and settlement services for cross-border RMB businesses, which built a "highway" for the RMB internationalization -- a key financial infrastructure as per international standards.

As of the end of March this year, the CIPS had 31 direct participants and 695 indirect participants, both from domestic and abroad. The actual business scope has extended to 148 countries and regions. The advancement of the Belt and Road Initiative also rendered a much clearer path of RMB internationalization. Governments conducted cooperation with international financial development institutions in infrastructure investment, which expanded the use of the RMB in this sector. The overseas branches of Chinese-funded commercial banks have increased year-by-year, the internationalization of the RMB bond market and the stock market has accelerated, and the RMB has been used more in the international bulk commodity trade.

In the next 10 years, it is hopeful that the RMB will play a role in the reserve currency on par with its 10.92 percent share in the SDRs, which is also an expectation from the international community.

The RMB internationalization epitomizes China’s commitment to international responsibility. It will not threaten the dominance of the US dollar. Instead, it will help reduce the pressure on the US dollar and diversify risks in the international financial system, thereby maintaining global financial stability.

In this sense, the US needs not worry that the RMB internationalization will challenge the status of the dollar. On the contrary, it should help the RMB accelerate its internationalization. By the middle of the century, the proportion of the RMB in the international reserve currency will be close to 20 percent, still ranking behind the US dollar and the euro.

Xu Hongcai is the deputy chief economist of China Center for International Economic Exchanges. He contributed this article to China Watch exclusively.

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