The Development Of Hong Kong’s RMB Offshore Financial Market Impact On Mainland Monetary Policy

With the steadily improvement of Chinese economy, the internationality of RMBhas become the main stream. Recently years, China has exploded its trading scale withEast Asia and East-South Asia when the overseas need for RMB is becoming more andmore. The establishment of offshore financial market is of critical importance to RMBinternalization. By this means, not only the interest rate and currency rate can be moredepend on the market, but also the scale of offshore RMB scale can be controlled and thesupervision will be more efficient. Firstly, the definition of offshore RMB market will bediscussed in the beginning of this essay. Secondly, the qualitative analysis andquantitative analysis will be used to demonstrate the impact of developing the offshorefinancial market on onshore monetary policies. On one hand, in the qualitative analysis,interest rate, currency rate and asset price will be discussed. On the other hand, statisticsare collected to demonstrate the impact on monetary policies. In the quantitative analysis,Granger causality method, VAR method and other methods are used to analysis themutual impact between the development of RMB offshore market and onshore monetarypolicies. At the last of this essay, recommendations will be given.