Leo Melamed, thumbed up to China’s New Economic Normal
2014-11-14 12:24:00    source:    click:


BEIJING, Nov. 13 (Xinhua)—“It is commendable that China takes on new normal and follows the right direction of reform,” Leo Melamed, Chairman Emeritus of CME Group, Inc. and “Father of Financial Futures”, told Xinhua on Nov. 12th.
Interviewed during the 6th International Finance Forum (IFF) Leadership Dialogue 2014, he told the reporters that he has noticed the changes in China’s economic situation, as referred by Chairman Xi Jinpin as Economic New Normal. That is, first, the economy has shifted gear from the high speed to a medium-to-high speed growth. Second, the economic structure is constantly improved and upgraded. Third, the economy is increasingly driven by innovation instead of input and investment.
“I will applaud China for this and certainly I think it is right!” says Melamed. He also thinks that stresses on ruling the country by law will make a more stable and safer legal system, which is of vital importance to the market system in China.
As a co-founder of IFF and the vice chairman of IAC, Melamed, now 82, has played a special role in building China’s capital market, especially in financial futures market.
When he recalled his first visit to Beijing in 1983, he said that 30 years of development in China was successful and also “wonderful”. The new ongoing market reform showed the wisdom of this generation of leaders, said him.
Talking about the development of Chinese capital market, Melamed pointed out the tremendous potential in Chinese financial futures market. For example, trading of CSI 300 Index Futures of CFFEX in recent years was extremely successful and outweighed that in most developed countries. However, the relatively small scale and its domestic limits stood in the way of future development.
According to him, the largest lesson drawn from the financial crisis in the U.S. six years ago was that only financial futures market performed well when other sectors were battered. This made him more convinced about the hedge function of financial futures market.
As to Renminbi internalization, he said that Renminbi did not enjoy an appropriate status since China rose to the world second economy.
It is generally thought that the internationalization of a currency can be summed up in three phases: First, a currency in world trade and payment. Second, a currency in international investment. Third, an international reserve currency.
Melamed believed that Renminbi has already had the features in first two phases, and has made remarkable progress in trade finance, payment and investment. But it still had long way to go from free convertibility to a formal international reserve currency.
He said, liquidity should be strengthened and more channels should be built to make Renminbi a genuine international currency and a widely-used reserve currency.
“Obviously, China is moving faster in the right direction”, said Melamed.

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