RMB Internationalization Stage Influencing Factors

Internationalization of the currency has always been a hot issue in the field of international finance, Along with the improvement of China’s economic strength and openness, people are increasingly concerned about the internationalization of RMB. Today, the RMB has begun its massive cross-border circulation and gradually been accepted by neighboring countries and regions as hard currency. As a fast-growing emerging economic entity, the internationalization of the RMB is an inevitable choice to enhance China’s comprehensive national power and international status. The internationalization of the RMB issue has attracted Chinese decision-makers as well as domestic and foreign scholars’attention, thus the study of the internationalization of RMB is of vital practical significance.Based on the domestic and foreign theoretical study, the thesis takes the currency international factor as the entry point to study the dollar, euro, yen’s international background and development path, and then analyzes each of the three major currencies’ effects, combining these factors with RMB internationalization development. The purpose is to provide reference and experience for different stages of the internationalization of the RMB, and then come up with the targeted solutions.The thesis is divided into four parts. The first part gives an explanation of the meaning of currency internationalization and international currency as well as the definition of the theory of optimal currency area and formation conditions. Whether internationalization can be realized depends on such factors, which the issuing countries and regions equipped with, as economy strength, trade conditions, the level of openness and development of financial markets, and all of these are international factors. In this section, this paper will also introduce the related theory of affecting factors of currency internationalization.The second part starts with the research of dollar, the euro, the yen internationalization. Through measurement and theoretical analysis, the paper combines the actual conditions of three countries and regions to analyze influencing factors of currency internationalization. Through the comparison, it can be found that three major currencies’international backgrounds and development paths as well as the influencing factors differ from each other, though they share some features in common. From the conditions of internationalization of the dollar, euro, yen, we can be enlightend about the internationalization of the RMB.The third part analyzes the current situation of the internationalization progress of the RMB, illustrateing the current degree of RMB internationalization from such three aspects as cross-border RMB business conditions, the condition of RMB foreign exchange market transactions and the functions of international reserve status. The level of RMB internationalization, at its infancy, is still very low. Therefore, to make correct and reasonable development strategy is particularly important.The last part clarifies the process of internationalization of the RMB should be carried out in stages. The first stage is to realize the monetary integration between Hong Kong, Macau, Taiwan and the mainland from the experience of internationalization of the euro at this time; The second stage is to implement the RMB’s Regionalization in east Asia, in which more experience and lessons can be learned from the yen internalization; The last stage is to make the RMB global internationalization, in which experience of the dollar can be learned and a unique pattern in line with the internationalization of the RMB should be worked out. To choose the process of the RMB internalization in stages may get better results.RMB internationalization is a gradual process, and we should make proper strategies to guarantee the smooth progress of the internationalization of the RMB, in line with the different stages of the internationalization progress of the RMB and combined with the experience of the dollar, the yen, the euro.The process of RMB turning into international currency is still a long and winding way to go, but the prospect is promising, and we believe that the internationalization of the RMB will be achieved ultemately.