Study On The Impact Of Currency Internationalization On Domestic Economic Growth

With the steady development of China’s economy and trade, an increasing number of China’s neighboring countries start to use RMB as trade settlement currency. Considering the enormous benefits that can bring internationalized currencies, experts and scholars increasingly value the RMB internationalization issues. However, while currency internationalization brings a positive impact to the country, it also makes a country’s monetary order difficult to contrl. Consequently, promoting currency internationalization is not suitable for all the country. As a result, whether to promote RMB internationalization becomes a controversial topic among Chinese experts. Considering that many contries, including China, will regard sustained and stable economic growth as one of the ultimate goal of macroeconomic management, we have to analyze the problem whether RMB internationalization is conducive to China’s economic growth before discussing whether China hould promot RMB internationalization in the current situation. According to this idea, this paper intents to research whether it is necessary for China to promot RMB internationalization in the perspective of the impact of currency internationalization on domestic economic growth. In recent years, the pace of RMB internationalization become faster and faster, therefore, this study is very urgent and practical significance.This paper hopes to research the impact of currency internationalization on domestic economic growth from the following angles:First, this paper sorts out the existing literature on international currency, summarizes the basic theory of international currency, and then respectively analyzes the positive and negative impacts of the internationalized currency on the nation from the angles of benefits, rights and responsibilities, which lays a theoretical foundation for further study. Second, this paper reviews the process of the various existing internationalized currencies, including the dollar, the pound, and the yen, analyzes the effectiveness of the internationalization of these internationalized currencies, summarizes the experience of the currency internationalization, and then explores the reference direction for the problem of RMB internationalization from both sides of success and failure.Third, this paper studys the relationship between currency internationalization and domestic economy, explores the transmission mechanism of how currency internationalization affects domestic economic growth through theoretical analysis from the two aspects of direct and indirect pathway, and then analyzes the effectiveness of the transmission mechanism in different currency internationalization degrees.Forth, recall the historical experience, exchange rate fluctuations have to be considered in the problem of currency internationalization, and in the context of currency internationalization, the effect of exchange rate changes on domestic economy is embodied mainly in the field of foreign trade, therefore, this paper will make a deep study on the effect of exchange rate changes on domestic trade.Fifth, in order to analyze the impact of currency internationalization on domestic economic growth more scientifically, this paper intends to study the internationalization dgrees of the various major internationalized currencies through the quantitative analysis method. This paper tries to establish a new mathematical method to measure the degree of the internationalized currency according to the theoretical foundation of internationalized currency laid before, and then calculates the internationalization degrees of the various internationalized currencies (the calculation results will be called the new currency internalization index in this paper).Sixth, this paper intends to study the relationship between the new currency internalization index and the country’s economic index through the calculation results, explores how the international degree of the currency affects the country’s economic level, and then tries to get a decisive conclusion on whether currency internationalization is beneficial to the country’s economic growth (especially RMB internationalization).Seventh, considering both the positive and negative voices on RMB internationalization, this paper will analyze the necessity of RMB internationalization according to the results of empirical research, and then proposes some original countermeasures and suggestions on how to enhance the transmission effect of RMB internationalization on China’s economic growth.The main conclusion of this paper is that before the currency of a country becomes an internationalized currency, the country’s economic growth would be helpful to improve domestic currency internationalization level, and the enhancement of the currency internationalization degree will promote domestic economic growth in turn. Therefore, it is necessary for China to promote RMB internationalization.In summary, this paper is helpful to deeply understand the meaning of the internationalized currency and the impact of currency internationalization on domestic economic growth, which has a very important significance for china that is at the crossroads of whether we should promote RMB internationalization or not. Meanwhile, the research method proposed in this paper usefully complements the research status of lacking existing theoretical models between the currency internalization degree and domestic ecomomic level.