How China swaps: the operation of RMB currency swaps in emerging and developing markets and their impact on currency internationalisation

Since 2009, the People’s Bank of China has created an expanding network of currency swaps around the world to facilitate renminbi internationalisation (RMBI). These lines present an attractive dollar alternative for many emerging and developing economies. (EMDEs) Despite these developments, I argue that while China's swap lines may play an important window-dressing role and may enable dollar access, the terms and operation of the RMB swap lines themselves constrain broader currency use by EMDEs. China’s currency swaps reflect and transmit, previously studied economic, political, and geopolitical impediments to RMBI. They provide RMB liquidity that is contingent and restricted, thereby undermining usability and consequently, their capacity to support sustained international RMB use in global financial markets. Drawing on qualitative evidence from elite interviews I evaluate my argument with three case studies on Indonesia, Argentina and Sri Lanka. My analyses illustrate the limits of China’s monetary expansion in the global South.