Research On The Impact Of Offshore RMB Market On Domestic Financial Stability

In recent years,the scale of offshore RMB has developed rapidly,and the types of offshore RMB products are changing with each passing day.The offshore RMB center is no longer limited to Hong Kong.In contrast,as for domestic financial markets,the degree of freedom of domestic financial markets is poor compared with offshore markets.In the short term,domestic financial markets cannot use effective market-based means to resolve the impact from the offshore market.With the continuous development of the offshore market,we can no longer ignore the threat posed by the offshore market to domestic financial stability.This paper first introduces the development status of the offshore RMB market in five aspects,and then uses econometric model to estimate the scale of offshore RMB stocks from the third quarter of 2004 to the second quarter of 2018 based on the gap method,and finds that the offshore RMB stock exists significant seasonal fluctuations.This has affected the independence of domestic monetary policy as the cross-border flows of RMB become more frequent.Then,this paper selects three kinds of domestic financial stability indicators,and processed them as the explanatory variables of the next empirical test.In addition,using the exchange rate difference and the interest rate difference between the offshore market and the onshore market as explanatory variables,based on the VAR model,using the Granger causality test,impulse response,variance decomposition and other methods to analyze the influence of offshore market to onshore financial stability.Finally,based on the results of the empirical test,reasonable policy recommendations are given:we should deepen the reform of domestic market and widen the RMB backflow channel,besides,cross-strait financial regulatory agencies should strengthen cooperation and exchange to jointly eliminate potential risk.