The Strategic Significance Of Shanghai Free Trade Zone’s Construction To RMB Internationalization

At the beginning of paper, we analyzed current situation of RMBInternationalization from four aspects: bilateral currency swap agreement,cross-border RMB settlement, off-shore RMB market and The international status ofRMB. We got this conclusion: The RMB internationalization has made certainprogress, but compared with the main international currency, the internationalizationdegree is low. Based on this, we continued to analyze the limiting factors of RMBInternationalization. Then we found domestic limiting factors include:capital project control, lack of marketization of both interest rate and exchange rateand the imperfection of the domestic financial system. From a global point of view,the existing international currency’s inertia also restricts the scope of the RMB’sinternational use. Next, we studied financial reforms in Shanghai free trade zone, andpointed out the RMB capital account convertibility, marketization of interest rate infinancial market, cross-border RMB use are the three important financial reforms topromote the internationalization of RMB. And we analyzed that in the construction ofShanghai free trade zone, we would faced with some problems, such as: the step ofcapital account opening, regulatory arbitrage of enterprises in the zone and the shockto domestic financial market, and put forward the corresponding countermeasures. Inthe last part of the paper, we looked far of Shanghai free trade zone to be RMBoff-shore finance center, and Shanghai might to be the international financial center,and at that moment, the Shanghai free trade zone and the whole Shanghai city’smeaning to RMB internationalization.