The Influence Of RMB Offshore Market Development On China's Financial Stability

After the outbreak of the global financial crisis in 2008,the long-term stability of the RMB has been favored by the international market.The Chinese government has launched a series of policies to promote the internationalization of the RMB.With the RMB internationalization accelerating and channels of RMB cross-border circulation increasing,the offshore market of RMB has developed rapidly,and the development of offshore market is bound to have an impact on China's financial system.To coordinate the relationship between offshore market development and China's financial system is not only related to the steady development of offshore market,but also to the sustainable development of China's macroeconomic system and the sound operation of the financial system.In view of these situations,this paper is based on the rapid development of the offshore market of RMB.On the basis of analyzing the present situation of the offshore market of RMB,it theoretically analyses the risks brought by the development of the offshore market of RMB to the banking system,capital mountain,and foreign exchange market of our country,and it also quantitatively analyses the financial risk situation of our country by constructing financial risk indicators.Secondly,this paper uses the money demand function to estimate the money demand gap at home and abroad,thus estimating the size of RMB offshore stock,and uses the volatility of RMB offshore stock to represent the degree of offshore market development.Then it uses the Vector Autoregression(VAR)model to empirically analyze the impact of RMB offshore market development on China's financial stability,at different levels and markets.The results show that the development of RMB offshore market will increase China's financial risk in the short run and improve the stability of China's financial system to a certain extent in the long run.Based on this,this paper puts forward some suggestions to maintain China's financial stability in the development of RMB offshore market.The feature of this paper is to link the development of RMB offshore market with China's financial stability.The topic is relatively new.Secondly,the paper innovatively constructs an index to measure China's financial stability and an index to measure the degree of development of RMB offshore market.That's where this paper will make a contribution.