A Research Into The Internationalization Of RMB From The View Of Currency's Invoicing Power For International Trade

At the preliminary stage of the world economic integration process, gold and silver were chosen as the final means of settlement in international business. In the era of classical gold standard, gold and silver acted as the all-functioning money not only nationally but also world-widely. However, with the magnitude of the world economy continued growing, gold and silver got off the stage due to their limited production and gave way to different credit currencies released by different governments. Along with the demonetization of gold, the international monetary arrangement set start a turbulent period while at the same time offered a chance for some currencies to get on the tack of internationalization.As China's economy continues thriving, the issue of RMB internationalization comes into the scope of people's discussions. Related researches are carried out from varied angles and have formed different opinions and suggestions. Since the process of world economic integration has seen the appearing of international currency and the international trade is the first step for a country participating in this process. This paper researches into the internationalization of RMB from the angle of currency's power to invoice international trade.First, this paper introduces the theory foundation of currency-internationalization, including the International Labor Division Theory, the International Economy Integration Theory and the Optimum Currency Area Theory. Because the above-mentioned theory foundation can't directly answer the question that how the RMB internationalization can be realized, this paper introduces a framework to analyze the RMB competitiveness based on which a new conclusion is formed: the ability to invoice international trade is the foundation of RMB internationalization. Then, this paper analyses the conditions under which the currency's ability to invoice international trade can be formed. One is from the perspective of the transaction cost in exchanging currencies, the more widely one currency is circulating, the lower transaction cost it has and the more likely it is selected to invoice international trade. The other associates the choice of invoicing currency with exporter's maximizing profit decision and concludes that the more differentiate the product is, the more monopoly power the exporter gains and the more likely the home currency is chosen as an invoicing currency. At last, this paper points out the difficulty the RMB internationalization runs into applying the currency-internationalization theory foundation and measures the degree of the RMB invoicing power. Some suggestions based on the above conclusions are given to propel RMB internationalization by means of enhancing the invoicing ability of RMB.