The Impact Of RMB Internationalization On China’s Financial Security

As mentioned in the 14th Five-Year Plan for the Development of Digital Economy,the digital economy is the future direction of global development.In the era of digital economy,whether the development of digital economy can improve the financial security in the process of RMB internationalization is also a question worth exploring.At this stage,China is working to promote the development process of RMB internationalization.As the internationalization of RMB poses a certain challenge to the powerful currency and its own development status has revealed certain problems and potential risks,it will have a certain impact on the level of financial security in China.The bottlenecks and difficulties faced by the development of the digital economy itself,so the issue of financial security will be more prominent in the era of digital economy,which has drawn more and more attention from the state.This paper explores the impact of RMB internationalization on China’s financial security by reading relevant literature and analyzing the current situation of RMB internationalization and China’s financial security development;on the basis of clarifying the mechanism of RMB internationalization from payment currency function,investment and financing currency function and reserve currency function on China’s financial security level,the relationship between the two is specifically analyzed and argued through empirical analysis,specifically It includes constructing China’s financial security index by using principal component analysis,and constructing a vector autoregressive model for RMB internationalization and China’s financial security index,and studying the relationship between them through impulse response analysis and variance decomposition analysis;finally,based on the conclusions drawn from the empirical analysis,it provides policy recommendations for prudently promoting RMB internationalization and maintaining financial security.The empirical analysis of this paper concludes that the payment currency function,the investment and financing currency function and the reserve currency function in RMB internationalization have inconsistent directions of impact on China’s security level.Finally,the following three conclusions are specifically drawn:(1)The payment currency function in the process of RMB internationalization will hinder China’s financial security.(2)The investment and financing currency function in the process of RMB internationalization will improve China’s financial security.(3)The development of the reserve currency function of RMB internationalization will generally improve China’s financial security.This paper hopes to analyze the mechanism of the impact of RMB internationalization on China’s financial security through the payment currency function,the investment and financing currency function and the reserve currency function through the study of the relationship between RMB internationalization and China’s financial security,and to provide reference policy recommendations for prudently promoting RMB internationalization and maintaining financial security.It is hoped that the favorable impact aspects of RMB internationalization on China’s financial security can be promoted,and the negative impact aspects of RMB internationalization on China’s financial security can be suppressed,so as to promote the construction of China’s financial security.