The Research Of The Hong Kong Offshore RMB Market's Impact On The Domestic Monetary Policy

In 2007 the outbreak of the financial crisis, our country realize the dangers of excessive reliance on the dollar in i nternational reserves, in addition, with the continuous development of China's economy since the reform and opening up, the deepening of foreign trade, make the international recognition of the RMB has been increasing, which leads to reach the goal of RMB internationalization in our country, considering that our country has not open on capital account and domestic financial system is not efficient, the development of offshore RMB market is of great significance for RMB internationalization. Offshore yuan market in Hong Kong as the largest offshore yuan market, it has developed rapidly since its inception, but with the large-scale offshore renminbi cross-border flows and the rapid development of the offshore RMB market, coupled with the current interest rate, exchange rate market-oriented our country is not high, there are some differences inside and outside the RMB price case, large-scale flow of arbitrage funds with the expansion of Hong Kong's offshore RMB market and cause, may have money supply, interest r ates, exchange rate within a certain degree of impact, so that the development and implementation of domestic monetary policy the effect of an impact.T herefore, the further study of how to deal with offshore yuan and cross-border circulation, the influence of monetary policy in China, has very important theoretical and practical significance.In this paper, I analyze the impact of Hong Kong offshore RMB market development to domestic monetary policy through two aspects. On theory, firstly I analyze the impact of Hong Kong offshore RMB to the domestic money supply through cross-border circulation channels; Secondly, analyze the impact of interest rates on the two markets; Lastly analyze the influence of exchange rates on the two markets. On empirical, I use the Granger causality test, VAR model and impulse response analysis to analyze the relationship between the two markets through the three channels mentioned above. The theory and empirical results show that the impact of the offshore yuan market in Hong Kon g to the domestic monetary policy does exist, but not significant. Therefore, we should still develop the Hong Kong offshore RMB market through perfecting the present existing problems and strengthen the management mechanism of RMB backflow, at the same ti me should also continue to promote the reform of the domestic market.