The Research Of RMB Internationalization Based On Labor Division And Transaction Efficiency

Currency internationalization refers to a country’s currency be widely accepted by other countries and regions in international trade. Currency internationalization should be supported by strong economies. Since the reformation, China’s national strength and the international status have improved significantly. As a result, the RMB has gradually been accepted and used by more and more countries, playing an increasingly important role in the global economic and financial system. However the RMB is still not a global currency, which harms the steadiness of China’s economic development. The financial crisis in2008requests diversification for the world monetary system, and the internationalization of RMB has become a need more than a possibility all over the world. To guard Chinese economic interests, develop the Asia-Pacific Region, and adapt to the trend of international monetary system, the RMB goes out of the border is inevitable.This paper intended to develop a new paradigm of currency globalization research based on the New Classical Economics. The method of inframarginal Analysis was employed to study the Transaction Efficiency of RMB. Firstly, a model of endogenous monetary system was developed on the basis of Professionalization and work-division. Secondly, the model was improved with the consideration of Transaction Efficiency, which extended the Chen’s model, and the relationship between Transaction Efficiency and RMB globalization was obtained. Finally, a series of Transaction efficiency index was proposed, and the impact of Transaction efficiency upon the international division of labor and currency globalization was demonstrated empirically. Conclusions and advices were obtained by comparing The Transaction efficiency index of RMB, US dollar and Euro.Some theoretical results were obtained. When the transaction efficiency is very small, the general equilibrium is self-sufficiency. With the improvement of transaction efficiency, the general equilibrium will finally evolve to the complete division of labor. In this case, the commodity which has the lowest transaction cost will become the commodity money. Given the social and institutional conditions, if the transaction cost of a credit system or any other currency substitutes is small enough, then money substitutes will serve as a medium of exchange in order to coordinate the labor division. If the transaction efficiency of RMB is high enough, RMB will replace other currencies in the international transaction.China should strengthen national economics continuously, and maintain the stability of macroeconomics at the same time; Open the financial market further, reform domestic financial system, improve the RMB exchange rate formation mechanism, and establish a multi-level capital market system. Keeping Chinese international reserves stable, China should expand the range of RMB cross-border trade with all strength. China also needs to increase public spending on education and improve the quality of workers. Finally, China must improve and perfect the infrastructure construction for electronic information transmission.