Empirical Study On The Degree Measurement And Determinants Of RMB Internationalization

Over the past 40 years of reform and opening up,China has made remarkable achievements in economic and social development.As the changes in global economic situation,the significant enhancement of China's economic strength and the great improvement of the financial influence,the use of major world currencies such as dollar and euro in traditional international settlement and trade can no longer meet the needs of the international market,the international community to the increasing demand for RMB,cross-border RMB settlement business is developing rapidly,the process of RMB internationalization accelerates and gets great achievements,so the issue of RMB internationalization has become a focus of widespread concern in all sectors of society.However,we must be soberly aware that the internationalization level of RMB is still low compared with the development of international currencies such as the US dollar and the euro,and the international status of the renminbi lags far behind China's position in the world economy.In this case,China is relatively passive in international trading,pricing power of bulk commodity and monetary policy making.From the perspective of long-term development,China must strive to get rid of the situation of a small currency country and improve the international competitiveness of the RMB so that it can be consistent with Chinese macroeconomy and national strength.Therefore,it is of great importance for China's future economic development to discuss the key factors affecting the internationalization of RMB and find out a suitable way for the internationalization of RMB.This article is divided into six parts,and the main contents are follows: The first part is introduction,which mainly introduces the background and significance of this article,the literature review at home and abroad,the content and methods of the article,as well as the innovation and shortcomings in this study.The second part is the theoretical analysis of currency internationalization,which mainly expounds the meaning,functions,and related theory conditions,then analyzes the mechanism of the influencing factors of currency internationalization.The third part is the development status of RMB internationalization,and introduces the current development of RMB internationalization from four aspects: the scale of cross-border RMB trade settlement,RMB financial transactions,RMB official foreign exchange reserves,and the offshore RMB market.The fourth part is the measurement of the degree of RMB internationalization.Using the relevant annual data from 1995 to 2017,the paper building an international index system of currency internationalization based on the three major functions of the international monetary.Then using the entropy weight method to measure the internationalization degree of the dollar,euro,pound sterling,swiss franc,yen and renminbi,and analyze the changing trend of these six currencies.The fifth part is the empirical analysis of the determinants of RMB internationalization.This paper adopts the fixed effect model and FGLS to explore and study the main influencing elements about the degree of currency internationalization.The regression results show that the economic scale of a country is the most important factor in affecting the internationalization of the currency.The degree of trade openness,the level of financial market development,political stability and scientific research investment have far-reaching effects on the degree of currency internationalization,and the currency inertia cannot be ignored.The sixth part contains conclusions and recommendations.This paper draws the research conclusions and puts forward targeted policy suggestions based on empirical results.