Research On The Impact Of Change In Exchange Rate On Currency Internationalization

At present,China's economy has developed rapidly,financial reforms have been carried out in an orderly manner,the circulation of RMB in abroad has increased,and the financial markets denominated in RMB has gradually increased.Finally,internationalization of RMB gradually is in line with the historical trend.The internationalization of the renminbi can also bring benefits such as improving China's international status,increasing China's impact on the world economy,and promoting China's economic and trade development.Therefore,this article studies the determinants of internationalization currency and how variation of exchange rate affect the currency internationalization.Our study is significant for policy guiding in the steady progress of the RMB internationalization.This article first summarizes the basic research of monetary internationalization and the research on influential factors of currency internationalization.Then it elaborates the basic theories of currency internationalization and the mechanism of how exchange rate affect the currency internationalization.It also summarizes the experience of the euro and yen internationalization,and then describes how the theoretical model is constructed.On this basis,quantitative research methods are used to study the influencing factors of currency internationalization,and then a panel smooth transition regression model is used to study how exchange rate changes affect currency internationalization.Finally,corresponding policy recommendations are proposed according to this study.Research shows that a country's economic strength,trade size,and the degree of development of the financial market all have a positive effect on the country's currency internationalization,and currency internationalization does have currency inertia,which is consistent with existing research.In order to study the impact of exchange rate changes on currency internationalization,the test found that exchange rate movements have a non-linear effect.It was found that when the exchange rate changes around 3%,there is a positive effect on currency internationalization by using a panel smoothing transition regression model.The positive effect was weakened once beyond the threshold,which indicates that a certain exchange rate appreciation is conducive to currency internationalization,the result is consistent with previous studies.There are three innovations in this paper: First,we selected the currency internationalization level to characterize variables based on three functions of internationalization currency,and we selected the US,Japanese,British and European countries' official foreign exchange reserves based on reserved function and international bonds based on payment function.The currency constitutes two variables measure the degree of currency internationalization;secondly,the dynamic panel model is used to verify the existing research conclusions on various factors of currency internationalization.The research findings have the same conclusion as the existing research.Third,Based on the study of currency exchange rate internationalization,we found that exchange rate changes have a nonlinear effect on monetary internationalization.Then we use the panel smoothing transition regression model to study the impact of exchange rate changes on currency internationalization.The results of this study have certain guiding significance for promoting the internationalization of the renminbi.China needs to develop the economy steadily,improve the financial market further,and open up the exchange rate market gradually so that China can become an internationally recognized valuation,settling,and reserved currency.