On The Construction Of RMB Offshore Market Group

In August2007, the subprime mortgage crisis swept the U.S., EU, Japan and the world'smajor financial countries, further weakening the international currency-the dollar's internationalstatus. The stability of the euro has also been questioned because of the continual European debtcrisis later. China as the representative of emerging economies has a good performance in thisround of financial crisis, their economic growth momentum is strong, making the relevantcurrency has also been sought after, of which RMB entered a sustained appreciation trend again.With the increasing of RMB pilot projects, the scale of cross-border RMB settlement has a rapidexpansion. By the end of October2011, the cumulative amount has been over2trillion yuan. InAugust2010, in the cooperation of the Mainland and Hong Kong regulators, Hong Kong set up anoffshore RMB market, allowed to use RMB for foreign investment directly. The demand of RMBcontinues to expand overseas, since freely convertible currency in current account has been carriedout for many years, the capital projects have not been at a fully open stage. How a growingnumber of offshore renminbi backs to the mainland through the normal channels, theestablishment of an offshore RMB market is imminent.In this paper, by studying the origin and development of the international offshore market,comparing the similarities and differences of the different modes of operation mechanism, andthen proceed with the offshore market's impact on the onshore market's two basic indicatorsinterest rates and exchange rates, to study offshore RMB market's positive and negative influenceon onshore market in the current situation of China. Since China has got only a part of the pilotbanks to participate in the offshore market operations, and the major transaction currency is U.S.dollars, so the existing offshore RMB business focuses on three main financial center-Hong Kong,Singapore and London.By comparing the competitiveness of the existing three markets, this paperputs forward Hong Kong is the most advantageous to set up the first large offshore RMB market.However, the reform of interest rate and exchange rate in China has not completed yet, thefinancial system has not been perfect, so the construction of domestic RMB offshore market stillhas a long way to go. However, due to the offshore market's impact on onshore market shouldnot be overlooked, and there is also a inextricably contact between different offshore markets, ifdomestic RMB offshore market can't keep a step ahead of the competition, the onshore marketinterest rates and the exchange rate pricing may be impacted significantly. So when the HongKong's offshore RMB market "pilot" develops to a certain stage, the domestic RMB offshoremarket should be established. Based on this, this paper puts forward to build Hong Kong offshoreRMB market "pilot" and Shanghai domestic RMB offshore market, which form a unique " thedouble center" offshore RMB market group, and presents some issues need to be focused on in theconstruction process of offshore market group...