Study On The Influence Of Hong Kong's Offshore RMB Market On The Domestic Monetary Policy

International experience shows that the formation and development of offshore financial markets is an important indicator of financial globalization, not only to bring a revolutionary change to the traditional onshore financial markets, but also push the U.S. dollar and the Japanese yen to become an important driving force of international reserve currency. With the continuous internationalization promotion of China's RMB, the Chinese Hong Kong's offshore RMB market has shown good momentum of development.And RMB has become the third-largest currency in HK,only next to HK Dollar and US Dollar;Hong Kong has become the largest offshore RMB funds outside the pool. With the expansion and development of Hong Kong's offshore RMB market, the Hong Kong offshore RMB market would play a more and more important role.With the continuous development of the Hong Kong's offshore RMB market,it will accelerate the cross-border movement of RMB.And with the RMB cross-border arbitrage being broaden,the effect is likely to restrict the implementation of domestic monetary policy.The approach and construction of this paper are as follows:On the base of the International Monetary Theory and the Trilemma Theory,using a combination of research methods including theoretical and empirical analysis, mainly based the VAR model.Through analysis of RMB cross-border arbitrage, the main scope of arbitrage behavior, change channels and their impact on interest rates in the Mainland, the exchange rate and money supply, and then analyze the impact of monetary policy on the mainland, Hong Kong offshore RMB market development. This study found that, for the moment, Hong Kong's offshore RMB market will have limited impact on the mainland's monetary policy making;However,in the long run, as Hong Kong's offshore RMB market expansion, as well as the increase of offshore RMB's back channels,Hong Kong's offshore RMB market may have substantial impact on the mainland's monetary policy making. Therefore,with the injection of the capital,the Hong Kong RMB offshore market should also be actively promted.Meanwhile,we must also improve the domesitc financial market regulatory system,promote the reforms of interest rate and exchange rate market-oriented gradually opening up the capital account and continue to improve the RMB back mechanism,in order to keep the risk of offshore maket within the controllable range.