The Analysis On The Factors Of RMB Cross-border Trade Settlement

Financial crisis broke completely in 2008, which exposed many flaws existing in the current dollar-dominated international monetary system. In this crisis, the exchange rate of the US dollar, the euro and other major international settlement currency fluctuated widely, leading to a risk in settlement for international trade and movement of funds around the world. In order to reduce the over-reliance on US dollar and exchange rate risk in the settlement of foreign trade, the experimental units on cross-border RMB settlement has been launched in July 2009 which played a positive role on decreasing exchange rate and accelerating trade exchanges between China and neighboring countries. By understanding the current situation of cross-border RMB trade settlement, the paper analyzes the problem existing in cross-border RMB trade settlement, identifies factors which influence the process of cross-border RMB trade settlement and makes empirical analysis and gets some conclusions. At last, appropriate countermeasures and suggestions are proposed based on the conclusions.On the basis of the theory of currency competition and trade settlement currency choice, this paper reviews the relevant theoretical literature, makes theoretical analysis on factors which influence cross-border RMB trade settlement, and builds a VAR model for finding out the dynamic relationship between RMB cross-border trade and its influencing factors. Finally, some conclusions are made:(1) there is a long-term equilibrium among OSM, TRADE, REER, EXHT AND PTS. (2) The development of offshore financial markets has a great impact on cross-border RMB trade settlement, obviously a active impetus which is not apparent at first with a certain lag and lasting for a long time. The level of trade development has suppression at first on cross-border RMB trade settlement and then has a promoted influence.