Research On The Linkage Risk Between Offshore Market And Onshore Market In RMB Internationalization

After the outbreak of the international financial crisis in 2008,the disadvantages of the international monetary system dominated by the US dollar began to emerge,and many countries called for the establishment of a diversified international monetary system.Since the reform and opening up,China’s economic development has made great achievements,and the international market has increased confidence in the RMB.In July 2009,the process of RMB internationalization started with the pilot work of cross-border RMB.After more than ten years of continuous efforts,China’s international trade and cross-border investment scale have been expanding,and its strength in economic and trade has satisfied the basic conditions for the internationalization of RMB.However,with the rapid deepening of China’s opening degree and the continuous increase of reform,the RMB will face a more complex and severe domestic and foreign economic situation,and the internationalization of the RMB still has a long way to go.At present,the internationalization of RMB is in a period of strategic opportunities,and the offshore RMB market,as a strong support for the internationalization of RMB,is also developing rapidly.The degree of coordinated development of the offshore market and the onshore market largely determines whether the internationalization of RMB can proceed smoothly.In recent years,with the acceleration of the market-oriented reform of the exchange rate,the linkage effect between the offshore and onshore foreign exchange markets becomes more and more obvious,and the fluctuation range of the offshore RMB exchange rate and the onshore RMB exchange rate increases.In this process,the internationalization of the RMB also shows the characteristics of periodic fluctuations.To identify and manage the linkage risk of the offshore and onshore market during the internationalization of RMB,this article bases on the perspective of volatile of exchange rate differential between two markets,and combines the trend of exchange rate,using research method of theoretical analysis and empirical study and comparative analysis.This paper clarifies offshore and onshore linkage mechanism and the transmission mechanism of the risk during the process of RMB internationalization,and identifies risk factors between them and puts forward countermeasures.Firstly,this paper introduces the development status of RMB internationalization,RMB exchange rate and RMB offshore market,and reviews therelevant theories and documentaries from three aspects,including the mutual influence relationship between RMB internationalization and exchange rate,the linkage relationship between offshore market and onshore market,and the relationship between offshore and onshore RMB exchange rate.Secondly,it analyzes the internal mechanism of the difference between the offshore and onshore exchange rates as well as the external factors affecting the exchange rate fluctuations.Then,it sorts out the linkage mechanism between the offshore and onshore markets,the linkage mechanism and effect of the exchange rates between the offshore and onshore markets,and the transmission mechanism of the linkage risks between the offshore and onshore markets with the method of theoretical analysis.Next,the data from May2012 to January 2019 are selected,and the GARCH(1,1)model is used to estimate and analyze the parameters of the fluctuation of the offshore market exchange rate difference,and the exchange rate fluctuation before and after the "8.11" exchange rate reform is compared and analyzed.In addition,based on the conclusion from the results of the empirical research,this article tries to summarize,and draw the main conclusions that the two markets correlation are enhanced when the degree of marketization of exchange rate becomes more deeply and exchange rate policy change has a short-term impact on the relationship of two markets and external potential risks from onshore market which may affect the coordinating development.Finally,according to the research conclusions,suggestions are put forward,such as pushing the reform of the onshore financial market steadily,accelerating the transformation of the offshore market,strengthening the coordination between supervision and reform,and guarding against external risks.