A Study On The Reverse Currency Substitution Of RMB Internationalization

Since the 2008 international financial crisis, the US dollar’s international status has been weakened. As a member of “the bricks”, China’s comprehensive strength has risen steadily. Both international trade and foreign exchange reserve are increasing, which makes RMB used in international valuation and settlement widely. Especially in recent years, our country and neighboring countries signed a number of trade agreements and expand cross-border RMB trade settlement policy, which makes RMB begin to be regionalized. Meanwhile, RMB’s strong value, increasing international settlement, large security investment overseas, and the improvement of the offshore financial market all help to promote the internationalization of RMB.In order to promote the process of RMB internationalization, we can not ignore the risks it produced, such as the anti-currency substitution risk. Based on the VAR model to our country in 1992-2014 anti-currency substitution of empirical analysis, it is concluded that China’s GDP, exchange rate, inflation rate, and total import and export to the effects of anti-currency substitution degree, of which is the most important influence of the total amount of import and export. In terms of specific risk, anti-currency substitution can arouse exchange risk, monetary policy risk, family wealth risk, and international balance of payment risk. Exchange risk is not only the influence factor but also the risk of the anti-currency substitution, so it will be the key to solve it.Combined with the influence factors of anti-currency substitution and the creation of various risks, this paper further summarizes the corresponding policy recommendations for reference. Reform of exchange rate formation mechanism and gradually open capital project is the key to deal with anti-currency substitution, and to build the Hong Kong offshore financial market as the backing, keep the GDP and total import and export of steady growth and low inflation rate is the effective choice to solve the anti-currency substitution.