The Chinese currency renminbi, or RMB, is not ready for rapid appreciation at the moment and the rise of its international status needs "patience," Nobel laureate Myron S. Scholes told Xinhua in a recent interview.
"Obviously, RMB has to appreciate over time... You know it's not right to do this at the moment because of the immaturity of the Chinese economy," said Scholes on the sideline of the 4th Lindau Nobel Laureate meeting on Economic Sciences.
He said "China still needs an export-based economy at this time. Internal consumption levels are too low in China right now to support the entire economy."
However, Scholes was confident that the consumption level would rise as people's income increases. "This will be a great chance for the world market and for countries to export goods and services to China," he said.
According to the economist, raising RMB's international status is by no means an easy job. China needs "patience" because "the Chinese financial system is still too young."
He suggested China to learn from the West, particularly in terms of infrastructure's building and understanding of the financial market.
"Don't run too fast, walk first. Be patient. I think the most important thing is the patience," He said.
To integrate RMB into the world financial market, "particularly I think it is necessary for China to allow convertibility of their currency over time. But it's not right to make it at the moment," Scholes said.
Talking about world economic outlook, Scholes showed both optimistic mood toward China and the United States. He believed that the United States would not be trapped in the same dilemma as Japan once did in the so-called "Lost Decade."
"I don't think so. We still have tremendous innovation, tremendous human resources in the US. I think once we get through this period and things are restructured, you will see tremendous growth in the US," he said.
Born in 1941 in Canada, Scholes shared the Nobel Economics Prize in 1997 with Robert Merton for devising a new method to determine the value of derivatives. His best known work was the Black-Scholes equation in collaboration with Fisher Black.