China's Yuan International Study

With development of globalization and integration of the world economy, financial globalization is quickening its pace. In point of tendency of financial globalization development, countries all over the world are making endeavors to formulate measures and strategies in order to improve competitive capacity of their own economy so as to seize "high ground" of international economy. While internationalization of currency, one key nature of financial globalization, is an important means in determining a country's status in the world market. China, as one developing country, has improved greatly its economic and comprehensive national power, especially after the entry into World Trade Organization (Hereinafter mentioned as WTO); the scope of its foreign trade has integrated into the global market. Looking into the future, for China to seek faster development, it must conform to the world development, gradually realize internationalization of RMB, and keep walking in a more integrated path with world economy.Major study of this paper is:Under the atmosphere of globalization, whether or not RMB be internationalized and how to cope with problems of internationalization. Based on International Monetary Theory, International Exchange Rate Theory, and related foreign trade theories, this paper carried out comprehensive research on China's received benefits and added cost after RMB became overseas currency in circulation; and offered policy proposal and suggestions based on theoretical study.Preface of this paper first briefly analyzed meaning of research on internationalization of RMB that it is requisite for China to get adapted to the context of economy globalization and self-development; then carried out discussion on the current situation of domestic and foreign study on Internationalization of RMB; and finally provided an overview information related to study characteristics, research technique, study objectives, contents of this paper and key questions to be solved.Chapter 2 majorly focused on historic changes and foreign experience of currency internationalization. This part firstly reviewed the evolution of international monetary system:it basically evolved through three phases:Gold Standard System - Bretton Woods System- Diversified Monetary System. Then chapter 2 focused research on internationalization progress of major currencies and the available foreign experiences provided to RMB internationalization. Foreign experiences included evolution progress of pounds internationalization, U.S.dollars internationalization, Japanese yen internationalization and the euro.Chapter 3 comparatively analyzed benefits and profits of RMB Internationalization to our country with evidence. RMB internationalization is a double-edged sword. It brings benefits and related costs meanwhile. In order to minimize risks that RMB internationalization brings and maximize benefits it also brings, comparisons between costs and benefits must be balanced carefully. This chapter analyzed possible costs and benefits that RMB internationalization could bring to our country from seigniorage perspective. Costs majorly included:policy cost, speculation impact cost, currency price stability cost and supervision and regulatory cost. Benefits majorly include:benefits from international seigniorage and international seigniorage expansion; benefits from international seigniorage included major financial surplus, balance earnings from currency settlement, counterbalance of transfer costs while reducing exchange rate risks, better modulating balance of international payments, improvement of status in international financial system and risk defensive capacity. Among comparisons and balances between costs and benefits, a series of strategies were offered for related policy-making bodies.Chapter 4 carried out overall study on current international circulation situation of RMB. In recent years, as unceasing expansion of our country's economic development and foreign trade, RMB has been in large-scaled circulation in Hong Kong (HK), Macao and Taiwan, also in peripheral countries.Chapter 5 posed proceeding strategies and research suggestions on RMB internationalization.Firstly, we should enhance financial regulatory scheme, strengthen central bank's supervision system and monetary policy control system. Clarify position of central bank. Secondly, realize construction of market-oriented RMB interest rate; construct and enhance monetary market. Thirdly, promote the free convertibility of the RMB under capital accounts. Finally, promote overseas circulation of RMB and prevent risks during internationalization progress and regional corporations.