Chinese Currency Substitution Study

Currency substitution is a special economic phenomenon in an open economy. It has an adverse effect on one country's macro-economy. This article firstly analysis the basic theories of currency substitution and Dollarization in the Latin America as a case in point, then put the emphasis on study of China's currency substitution. This question is divided into the following two aspects: China's Dollarization-RMB is substituted by dollar and RMB's internationalization-RMB substitutes other countries' currencies. The article makes an quantitative analysis in the former aspect and studies of later aspect on the eye of RMB's internationalization. Finally, the article points out the correspondent policy suggestions to prevent RMB from being substituted and improve RMB's internationalization.