Research On The Price Formation And Conduction Efficiency Of The RMB Offshore Market In Hong Kong

Since2008financial crisis, it exposed the irrationality of dollar-centeredinternational monetary system which has its own limitation.RMB internationalizationwill be the future of the national development strategy. As we know, financial industrydevelopment in China lags far behind other developed countries. Through theconstruction of offshore RMB financial center in Hong Kong, we develop the HongKong as the offshore RMB reform of "experimental field" and learn its successfulexperience to reform onshore financial market. Finally, we realize to integrate Chinainto the international financial market and gradually promote the internationalizationof the RMB. This paper focus on the conduction efficiency between the RMB onshoreand offshore market in Hong Kong by the index of interest rate and exchange rate. Thepaper supplies and develops the offshore financial market theory.Based on the combination of theory and reality, this paper follows the logic ofidentifying the problem, analyze it and solve it. The in-depth analysis and systematicdiscussion of the linkage and interaction between the RMB offshore and onshoremarkets is based on a combination of qualitative and quantitative research, with a focuson the analysis of the situation on the ground and policy options.This paper begins with a review of recent literature on offshore financial marketand a detailed introduction on the concept, formation theory, and then a summary offinancial market interest rate and exchange rate price theory. Next, this paper analyzesthe RMB offshore financial market from currency, interest rate and exchange ratemarket in Hong Kong, and then gives the summary on the status, characteristics anddevelopment trend for each market. In the third part, this paper analyze the priceformation mechanism of RMB offshore market in Hong Kong and conduction route toonshore market from the interest rate and exchange rate market. In addition, this paperconcretely researches on the RMB interest rate, exchange rate and the conduction mechanism between offshore and onshore market based on the empirical analysis andthen point out the problems about the conduction efficiency. In the end, it gives somecountermeasures and advices to promote RMB offshore market in Hong Kong.