Research On The Internationalization Of RMB

It has been nearly four years since the American financial crisis broke out in 2007.The global economy started to recover. When we pondered on the crisis, the dereliction of U.S. financial regulators and the consumption patterns were accused. In addition, many scholars brought up that there were some significant drawbacks of the international monetary system. The calls for the reform of the international monetary system continued. Then the internationalization of the RMB has become a hot topic.First, this paper introduces the background of the internationalization of RMB. For the need of international monetary system reform, the internationalization of RMB is necessary. In addition, China's economy and foreign trade are growing at a fast rate, which provides a realistic basis for RMB internationalization. At the same time, China cooperated with East Asian on currency and established the RMB settlement pilot. The facts indicate China is also promoting the internationalization of RMB. Based on the facts discussed above, the research of internationalization of the RMB has a very important practical significance.In the second part, this paper presents definitions of the international monetary and the requirements of the internationalization of monetary. Then it provides the experiences of the internalization of the U.S. dollar, the euro and the yen, which can offer references for RMB. US relied on powerful economic strength and the post-war arrangements for the international exchange rate system to achieve the goal of internationalization. The yen's internationalization is because of the leading the government and lots of output of the capital projects. Under the coordination of all countries in the euro area, the euro achieved after a thirty years of institutional arrangements and consultation. China can learn that strong economic strength and well-developed financial markets are important bases for international currency and the process need the necessary international economic cooperation.The reasons of internationalization of RMB are as followed. First, it is the need of the reform of the international monetary system .Second, for our country, we can get some advantages, such as the seigniorage income and the benefit for international trade and investment. In addition, it can improve the political status in the world. All in all , the RMB internationalization can bring many benefits to China.But in the process of internationalization of the RMB, the currency of international law and the special national conditions should be considered together .We must choose the proper mold of currency internationalization. In this paper, the process is constituted with three stages. In the first stage, in order to promote the size of RMB settlement in international trade, accordingly we need to continue the improvement of financial system and the construction of developed financial market. In the second phase, we need establish the offshore financial market which can offer a trading intermediary for the non-residents. In the same time, in the process of RMB internationalization, we must promote the free convertibility of RMB, improve the exchange rate mechanism and achieve convertibility of RMB under the capital account. In the third stage, on the basis of the integration of our currencies, we should gradually reach the final internationalization.In the process of internationalization of the RMB, China will be facing many risks. We may be faced with "Triffin dilemma", financial regulation will be harder and monetary policy independence and economic stability may be affected. In this case, our country needs to improve overall strength to resist risks. In addition, we must improve the financial market and strengthen financial supervision. Furthermore, in the international process, we must attach importance to the Asian financial cooperation.The process of currency internationalization is not done overnight. It is not only due to economic strength, but also the performances of politics, military affairs economy and culture in the currency level. Internationalization of RMB should base on the national conditions and China should continuously improve the overall strength. The process will be gradual and will last a long time. China should prevent risks and adjust accordingly. Only in this way can we achieve the internationalization of RMB.