Entered the system this will be beneficial for

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entered the system. This will be beneficial for international banks in order to more efficiently access to the RNB market, which earlier has been very costly and slow. There are two criteria for determining whether a currency can be a part of the SRD, firstly the issuer country must be a major exporter , and secondly the currency must be freely tradable. During the past five years, the Chinese export has accounted for about 11% of the global total, which place them the third biggest in the world. The second criteria has been the biggest issue for the renminbi and its internationalization. Currently the renminbi does not meet the requirements of being fully convertible , which challenge the global financial system. This is due to China's economy being ruled by a Communist party that previously has restricted the convertibility of its currency in addition to protect its domestic capital from foreign influences. 71 Moreover, it is the first Eastern democracy to become an elite global reserve currency. In light of this, economists are questioning the basis of the decision, if it has been thoroughly considered. It has been suggested several years of lobbying from Beijing to gain this prestige to its currency. In conclusion in our opinion with an emerging economy, corporates and investors have to be careful with managing their exposures and moderate diversification. Meaning China is not considered a fully stable economy just yet. Moreover, the day after the announcement, offshore trading weakened regarding speculations on intervention by China's Central bank. There is a fear that the Chinese economy will go into recession and after becoming more internationalized a recession will affect the global financial market. However the implementation of RNB provides opportunities for businesses and investors off-shore. Implementing the RNB as an elite global reserve currency adds its value to the global financial system in the long term as China is currently a leading exporter and trading country . Because, for RNB to even be considered the Chinese financial system and management had to become more flexible which is an advantage for international banks settled in China or trading offshore. 70 [Accessed 2015-12-04]: - 00144feabdc0.html#axzz3tMvqiJNx 71 [Accessed 2015-12-04]: - d47aa298f769.html#slide0
PAGE 36 The benefits and costs that securitization is posing to the banking industry Securitisation is one of the most important financial innovations and it got its start in the 1970s. Generally, a company with income-producing assets identifies the assets that it wants to remove from its balance sheet and pools them in a reference portfolio 72 . Then this portfolio of securities is sold to financial institutions. The investors receive payments from the issuer's account of cash flows created by the reference portfolio. There are numerous benefits and some costs to banks from securitisation, which will be listed and discussed in detail in this report.

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