The Impact Of Offshore RMB Market Development On The Target Of Domestic Monetary Policy

With the development of China's economy,the promotion of its international status,and the initiative of One Belt One Road,the RMB has attracted more and more attention from the world.Therefore,the internationalization of RMB gets an opportunity.With the deepening of RMB internationalization process,the construction of offshore RMB bond market is very important to meet the domestic and foreign investm ent demand brought by the substantial increase of RMB stock.Offshore RMB market can provide sufficient pool of overseas reserve funds and financing channels for overseas capital.Also,it has price discovery function through market transactions.The continuous development of offshore RMB market has brought a large number of cross-border RMB flows.At the same time,the offshore and onshore RMB has a strong linkage in the interest rate and exchange rate.Because the offshore market is more sensitive to international risks,there will be frequent fluctuations of domestic interest rate and exchange rate.The fluctuation of domestic financial market brought by the development of offshore RMB market will affect the intermediate target of monetary policy,and affect the realization of the final target of monetary policy through the transmission mechanism of monetary policy,thus affecting the effectiveness of monetary policy.This highlights the necessity and importance of researching the impact of offshore RMB market development on domestic monetary policy target.In the first chapter,the paper firstly expounds the background and significance of the topic.Secondly,on the basis of summarizing the existing research results,it summarizes the relevant literature about the linkage between the offshore and onshore financial markets in terms of interest rate and exchange rate,the impact of the offshore financial market on the domestic money supply and the impact of the offshore financial market on the domestic monetary policy.Thirdly,it puts forward the research methods and main contents of this paper.Finally,it summarizes the innovation and shortcomings of this paper.In the second chapter,firstly,it summarizes the development process and current situation of offshore RMB market.Secondly,it introduces the linkage ways of domestic and foreign financial markets,which are: interest rate difference,exchange rate difference and short-term cross-border capital flow.Finally,it analyzes the impact of the development of offshore RMB market on the three linkage ways of domestic and foreign financial markets.In the third chapter,on the basis of the previous chapters,from the perspective of monetary policy transmission mechanism,this paper uses theories to analyze How the development of offshore RMB market influence the realization of the final target of domestic monetary policy through intermediate target.In the fourth chapter,we use Granger causality test and impulse response function to test the impact of the development of offshore RMB market on the linkage ways of domestic and foreign financial markets.Then,we build EGARCH Models to test the impact of the linkage ways on the intermediate target of monetary policy and whether there is "leverage effect" in the impact.In the fifth chapter,we constructed TAR threshold model,taking the offshore RMB International Index and the RMB deposit volume in Hong Kong as threshold variables,two intermediate targets of monetary policy as explanatory variables,and two final targets of monetary policy respectively as explanatory variables,to test how the different development degree of offshore RMB market affects the realization of domestic monetary policy final target through the regulation effect of intermediate target.In the sixth chapter,according to the previous theoretical and empirical analysis,the paper summarizes the conclusions,and puts forward relevant policy recommendations to deal with the impact of the development of offshore RMB market on the target of domestic monetary policy.