Research On Currency Cooperation Between China And 23 Countries Along The Silk Road Economic Belt

Economic globalization is the main theme of the development of the world today.The US subprime mortgage crisis in 2008 and the European sovereign debt crisis in 2010 severely impacted the existing international monetary system The global financial crisis has caused a change in the global financial environment.The Chinese voice in international organizations has been increasingly strengthened.The World Bank proposed that the future international monetary system will form a new pattern of three-way exchange of the US dollar,the euro,and the renminbi.On October 1,2016,the IMF announced that the inclusion of RMB in the Special Drawing Rights(SDR)came into effect.The initial approval of the renminbi as an international circulating currency by the global market shows that RMB internationalization is not only an inherent requirement for China's future economic development,but also an effective path for advancing the reform of the international monetary system Under the background of the "Belt and Road Initiative",it has important practical significance to study the country currency cooperation along the Silk Road which will promote the development of trade and investment in the Silk Road Economic Belt,the international financial crisis after the global financial governance,and the realization of RMB regionalization and eventually becoming an international currency.This paper discusses the monetary cooperation between China and countries along the Silk Road from both theoretical and empirical perspectives.First,based on the single standard of the optimal currency area,we will explore whether the economic indicators of the 24 countries along the Silk Road(China and the 22 countries with which they have signed currency swap agreements and Turkmenistan,or C24)will converge.The results show that C24's economic development level,financial integration,inflation rate,labor market structure,and government financial status indicators are quite different.The possibility of forming a single currency area does not exist at least at present.Based on this,it is considered that countries with basic conditions for screening will form a sub-regional monetary cooperation mechanism,and a greater range of monetary cooperation will be achieved when conditions are ripe.Secondly,HP filter was used to analyze the economic cycle coordination of China and five regional economies along the Silk Road(by geographical location)and explore the possibility of forming sub-regional currency regions.The results showed that China and six East Asian countries(Korea,Mongolia,Malaysia,Indonesia.Singapore,and Thailand),China,and five West Asian countries(United Arab Emirates,Turkey,Georgia,Armenia,and Qatar)and China and Central Asia and eight European countries(Uzbekistan,Kazakhstan,Tajikistan,Kyrgyzstan,Turkmenistan,Russia,Belarus,Ukraine)have a synergy of economic cycles and have the possibility of forming currency areas.Thirdly,the SVAR model is used to analyze the symmetry of economic shocks to test the feasibility of forming currency areas in sub-regions.The results show that there are symmetry in the economic impacts between China and the six countries in East Asia,China and five countries in West Asia,indicating that it is possible to explore the idea of promoting currency areas in the subregion.The symmetry of the economic shock between China,Central Asia and Europe,Tajikistan,Kyrgyzstan,and Ukraine is relatively weak,indicating that the three countries do not meet the currency area in this region condition.Finally,based on the empirical test,it concludes the research conclusions of this paper.First,conditions for the formation of a unified currency area by 24 economies along the Silk Road are not yet available;second,China and six East Asian countries,China and five Western Asian countries,and China and Central Asia and Europe have the possibility of forming a subregional currency area.In the three sub-regions,the value of the RMB is stable and it has achieved the status of the international reserve currency.China's economic strength and sufficient foreign exchange reserves determine the basic conditions for the "anchor currency".It should be noted that the economic convergence conditions proposed by the early currency area theory are very strict.This paper uses the economic cycle synergy,economic shock symmetry,and cost-benefit analysis methods to analyze whether the sub-region meets the currency area conditions.Therefore,relevant analysis conclusions does not necessarily mean that the subregion has the necessary and sufficient conditions for the formation of a currency zone.Third,the currency zone is a form of the highest level of monetary cooperation.Its sufficient conditions actually exceed the scope of economic analysis.From this point of view,even with regard to the three subregional theories,the ideal goal of monetary cooperation in the mid-to long-term may be to promote the formation of a common exchange rate mechanism.At present,one area may be selected for active exploration.