Research On The Route Selection Of RMB Internationalization

The financial crisis which swept the whole world broke out in 2008. The western countries led by the US generally plunged in economic stagnation even recession. Out of its self-interest, the US has implemented some economic policies such as currency depreciation and quantitative easing monetary policy to stimulate its economy. As the dominant international reserve currency, perennial weak US dollar puts the countries with huge international reserve, especially for China, into a dilemma:On one hand the US dollar is the most reliable instrument for risk hedging under the circumstances of financial crisis; on the other hand, their dollar assets have to confront the risk of depreciation. And at the same time, as the most frequently used denominated currency, its constant depreciation also makes the bulk commodities' prices persistently soar up, which increases the risk of imported inflation for various countries. So the voice request for the multi-polar and balanced development of the international currency system gets stronger. Since the reforming and opening up to the world, the Chinese economy has acquired a remarkable achievement and led the world economy growth which makes China the second largest economy in the world now. The inconsistency between the international status of the RMB and the national power of China is increasingly obvious, so the RMB internationalization has become a hot spot topic for both domestic and overseas scholars. Now the academia has achieved a rich harvest about the theories, background conditions, significance, necessity and feasibility of the RMB internationalization.This article firstly defines the concepts of international currency and currency internationalization; comprehensively explains the theory of optimum currency areas and relative theories of currency internationalization; analyzes the policy option for currency internationalization based on the ternary paradox. Secondly this paper gives three routes for currency internationalization and chooses pound, US dollar, Euro and Japanese yen for each specific route; through systemic retrospect of route and process for those currencies and summarizing their experiences, it also provides credible reference patterns and routes for RMB internationalization. Based upon the theories statement and analysis of nations' comparison, this text applies the SWOT to comprehensively demonstrate the domestic foundation from four aspects including the opportunities, challenges, the existing advantages and disadvantages of RMB internationalization, and analyses the external conditions including the international background of RMB internationalization, the facilitation measures that government have taken and the existing achievements. Besides that, it uses the OCA index model to carry out an empirical test of RMB regionalization which provides practical basis for the route design of the RMB internationalization. Once more, the thesis points out the principles for the design of RMB internationalization. That is the RMB internationalization should adopt a route which integrates the gradual pattern and regional combination pattern while promotes the liberalization and regionalization of RMB on the basis of alternative paths and current conditions. In the end, this treatise puts forward some policy recommendations aimed at propelling the RMB internationalization.