Photo: iStock
Photo: iStock

Cross-border capital flows need to be managed in the coming five or ten years, so as to avoid systemic financial risks, said economist Li Daokui, reported.

Li said plenty of financial assets exist as bank deposits and cash, which is highly liquid and can be converted into US$23 trillion.

If the capital account is opened too fast and the public were to change 1/10 of the yuan to other currencies — which would be US$2.3 trillion — it could trigger a financial crisis.

Thus, Li thinks the internationalization and the free flow of the capital account should not be the priority. The primary objective should be stability.

Meanwhile, it is also necessary to constantly improve and stabilize the domestic financial system and enhance its ability to prevent risks, Li added.