The Empirical Research Of Factors Affecting The International Currency Status

International monetary, exchange rates, monetary system has been governments and scholars issues of concern, each country tries to make their own currency become international monetary, thus in the international monetary system they access to certain power, enjoys benefits for their countries from the international monetary, affects the trend and pattern of international economic activity. At the beginning of this article, the author from a different angle expounds many domestic and foreign scholars'researches of the international monetary and currency internationalization.Because at present there is not a clearly uniform definition to international currency, so this paper firstly introduces Cohen, Hartmann and the IMF respectively definitions of international monetary. Then this paper gives a inductive generalization of the international currency six functions which the international currency plays:price currency, settlement currency, asset currency, base currency, intervened currency, reserve currency. Each scholar select the metrics which measure the standard of international currency status are not the same, this paper choose every countries'currency share in foreign exchange reserves as a measure, and study the change of the share in foreign exchange reserves to the analysis the influence factors of the currency status. This paper firstly analyses the influence factors of the currency status one by one. The economic power of the country is the most important influence factors of the currency status, usually, international currency contacts together with the strong economy, especially the economy with strong international trade and international investment, because a lot of international trade and international investment will make huge foreign exchange transactions, the currency of the economy naturally become the important one in the foreign exchange market. According to Grassmann's Law, it is easier to choose national currency as a settlement currency in export trade than in import trade. When consideration the influence factors of the currency status, it is better to use the export trade to reflect a currency status in the international monetary system. Entering into the age of economic globalization, multinational corporations drive the booming developments of the international direct investment, and it is easier to choose national currency as a settlement currency in international direct investment, so international trade and investment is also one investigation factor in consideration of the influence factors of the international currency status. Good openness, fluidity and relatively developed financial markets have important influence on the status of an international currency. Every recent international monetary has a native developed financial market as a support, which is an international financial centre. As an international currency, it goes without saying the importance of strong and stable currency, the function of asset currency requires the strong international currency, the currency stability determines the quantity in the reserve currency, and reflects the status of an international currency. When a currency become an international currency, the currency will have "historical inertia", the inertia reflects on international trade, international investment and many aspects.According to theoretical analysis, the author selects the following factors for statistical and quantitative analysis:proportion of various countries'GDP, import and export trade, exchange rate (including real effective exchange rate and cross exchange rate),10-year government bond interest rate, real rate of return, amount of bonds. Data sample range is from the first quarter of 1999 to the fourth quarter of 2010.It has 48 observation values. When it comes to statistical data analysis, the author conducts a correlation analysis of the factors and the dollar's, the euro's, the pound's and the yen's share in the foreign exchange reserves. The results show each currency and the selected factors have a correlation with different degrees. These show that the selected factors are the related influence factors of the international currency status.Econometric analysis is divided into two parts. Firstly the author conducts the cointegration analysis of the influence factors. The results show that GDP and real effective exchange rate one step forward forecasting have a significant impact on four international currency's share in foreign exchange reserves. Import and export trade have a significant impact on the pound and the yen. Real rate of return have a significant impact on the dollar, the euro, the pound. Amount of bonds have a significant impact on the euro, the pound and the yen. That is the economic power of country, international trade and international financial market have an impact on foreign exchange reserves. But the specific influences which the factors have on the international currency status are different. Secondly the author conducts the panel data analysis of the influence factors. The results also verify the above conclusions, and further show that the economic strength is the most important factor. At the same time, it verifies the international currency has a certain inertia, and exchange rate expectation have an impact on the change of international currency's share in foreign exchange reserves, which will raise with expected appreciation of an international currency exchange rate.Finally, this paper summarizes the conclusions:the economic power of country is the most important factor which have influence on the international currency status. International currency has inertia and predictability. The financial market of international currency-issued country has an increasing influence on international currency status. The author according to the above conclusions puts forward own ideas and suggestions of RMB internationalization:The government should take sound and fast economic development in the first place, and depending on different situations master the role of international trade on the internationalization of RMB, and actively build our country's international financial center.