A Study Of The Influencing Factors Of RMB Internationalization

Since the financial crisis in 2008,the international monetary system dominated by the dollar exposed a lot of drawbacks.The RMB is getting more and more attention from the world and the process of internationalization of RMB is speeding up.Great progress has been made and it is becoming more and more important to understand the factors affecting the internationalization of RMB.This article is on the basis of combing the development history of RMB internationalization.The development status of RMB internationalization is analyzed from three aspects: Renminbi denominated settlement,RMB financial investment,and RMB international reserve.It is believed that the scale of RMB cross-border trade settlement is expanding,the proportion of international payment is increasing,the scale of direct investment and securities is increasing,the capital market is opening up gradually,and the foreign exchange market is improving day by day.The function of RMB as an international foreign exchange reserve is increasing.On the one hand,the internal factors that affect the internationalization of RMB are theoretically analyzed.It concluded that economic strength,trade scale,financial market development and currency stability are main internal influence factors.And the specific development status of four factors and the influence of these four factors on the internationalization of RMB is analyzed concretely.On the other hand,it analyzed the external factors influencing RMB internationalization from three aspects: international initiative factors,international events and international environmental factors.The conclusion is that the “The Belt and Road” initiative,the RMB to join SDR and international economic environment will be conducive to the internationalization of RMB.Britain exiting from the EU has a negative impact on the internationalization of RMB in the short term.The international political environment will impede the internationalization of RMB.Furthermore,the factors affecting the internationalization of RMB are empirically analyzed by constructing vector auto regression(VAR)model.As far as the internal factors,we conclude that economic strength,trade scale and financial market development have positive effect on RMB internationalization and the fluctuation ofcurrency value has a negative impact on the internationalization of RMB.Among them,the economic strength and the degree of financial development have a greater degree of influence.As far as the external factors,we concluded that the implementation of the“The Belt and Road” initiative and adding the renminbi to the SDR had a significant role in promoting the internationalization of RMB.Among them,the influence of“The Belt and Road”initiative for the internationalization of the RMB is larger.The Britain exiting from the EU has a negative impact on the internationalization of the RMB.Finally,based on the above analysis and according to the economic situation at home and abroad and the specific conditions of our country,we put forward five policies and suggestions to promote RMB internationalization.They are using“The Belt and Road”initiative to strengthen regional financial cooperation,accelerating the reform of exchange rate formation mechanism,steadily opening up the capital market and continuously enhancing our economic,political and military strength,continuing to expand the scale of trade,the implementation of the Renminbi denominated settlement for bulk commodities,and actively coordinating the competitive relationship between RMB and US dollar and yen.