The Study On The Influential Factors And Development Strategies Of RMB Cross-border Settlement

With the continuous development of China’s foreign trade and economy and thepromotion of China’s comprehensive national power, RMB’s international status isincreasingly valued. In the early years, RMB was frequently used in border trades, whichmakes RMB the “hard currency” in the surrounding areas. After the global financial crisis,RMB still keeps appreciating, creating good conditions for RMB internationalization. InJuly2009RMB cross-border settlement was officially launched. Finally, China took thefirst step of RMB internationalization. During the past four years, RMB cross-bordersettlement has been well progressed. Whether the trade settlement or the direct investmentboth have achieved explosive growth. Although RMB has become one of the top tencommonly used paying money, the using proportion as the world’s currency is only about1%.Compared with the U.S dollar, the Euro and other major international settlementcurrency, there still exists a big gap between them. There is still a long way to go to furtherexpand cross-border RMB settlement business and realize the goal of RMBinternationalization. Therefore, it is necessary to study the factors and developmentstrategies of RMB cross-border settlement.Firstly, this article reviews the development process of RMB cross-border settlementand analyzed its present situation and the impacts on China’s economy. Then analyzes thefactors of RMB cross-border settlement from the following aspect: the acceptance degreeof RMB; the circulation degree of RMB; the perfect degree of the related supportingmeasures. In order to validate the results of theoretical analysis, this article selects themonthly data from October2010to September2013to make the VAR model. Using unitroot tests, impulse responses analysis and variance decomposition to do the empiricalresearch on the influential factors of RMB cross-border trade settlement from the angle ofnarrow sense of RMB cross-border settlement. It shows that the development of offshoreRMB market, the fluctuation of RMB exchange rate and the development of China’s foreign trade can influence the scale of RMB cross-border settlement, especially thedevelopment of offshore RMB market. Lastly, combining the conclusions of the theoreticaland empirical research, this article puts forward some relevant suggestions to furtherpromote the development of RMB cross-border settlement, such as further developing theoffshore RMB market, maintaining the long-term stability of RMB exchange rate andimprove the level of China’s foreign trade and economy.