Empirical Study On RMB Internationalization

Since the financial crisis in2008, China’s influence on the world economy has been increasing rapidly. However, the status of RMB does not match the status of China’s economy. As a result, more and more people appeal for the acceleration of the internationalization process of RMB. Actually, there are many scholars who have studied the issue of RMB internationalization, including the requirements for RMB internationalization, the benefits and costs of RMB internationalization, how to prevent the risks of RMB internationalization and so on. However, most studies are qualitative.This paper aims to do quantitative research on the issue of RMB internationalization, supplementing the studies on this issue. Firstly, the paper reviews the previous research achievements on currency internationalization and RMB internationalization, then qualitatively analyzes the conditions RMB already has to be internationalized. Then the paper aims to answer two questions through empirical research. The first question is whether the time for RMB internationalization has come. To answer this question, a panel data model based on dollar, yen, pound sterling and euro is established. By analyzing the panel data model, we get the influencing factors of currency internationalization and their respective influence. Subsequently, we put the data of RMB into the model to estimate the theoretical internationalization level of RMB. By contrasting the theoretical level and real level, we judge the relative process of RMB internationalization, then whether the conditions for promoting RMB internationalization are ripe can be told. The second question is whether RMB should be internationalized. By analyzing the benefits and costs RMB internationalization can bring, we can tell whether RMB internationalization is advantageous. The study finds out that the benefits of RMB internationalization far exceed its costs. In order to obtain the substantial benefits, we should promote the process of RMB internationalization. Finally, this paper proposes several recommendations based on empirical findings.The innovations of this paper are as follows:firstly, panel data model is established to determine quantitatively whether it is high time to promote RMB internationalization. Secondly, benefits of RMB internationalization are quantified to determine whether we should promote RMB internationalization.