Research On RMB Internationalization From The Perspective Of High-level Opening

Since the pilot of RMB settlement in cross-border trade was carried out in 2009,the international status of RMB settlement pricing,investment and financing,reserves and other monetary functions has improved significantly.The world economy has to face recession risk because of the novel coronavirus pandemic.The negative interest rate has brought uncertainty to the financial market.And the Sino-US economic and trade frictions continue to deteriorate.The United States is going to "go to China" in the financial field,the United States is carrying out "de-sinicization" in the financial field.So the internationalization of RMB still faces serious challenges.This paper mainly adopts the combination of historical and logical analysis method and international comparative analysis method,and systematically combs the opinions from various perspectives such as the definition,development status,influencing factors and mechanism,promotion strategies and paths of RMB internationalization.By analyzing the current status,problems and new situations of RMB internationalization,learning from the currency internationalization experience of developed economies such as the United States and Japan,combining the construction of the “Belt and Road”,digital RMB,and capital account opening,exploring forward-looking policy recommendations.In theory,if a national sovereign currency is going to become an international currency,it generally has the following conditions.It has strong political and economic strength,and has a relatively high share in the global economy,trade and finance.The domestic economy maintains steady growth and the financial market system is comprehensive.Moreover,it has diversified investment channels,and a high degree of openness,sufficient foreign exchange reserves,stable balance of payments structure and stable currency value and reasonable liquidity.And the monetary policy keeps independence,continuity and predictability.Correspondingly,the internationalization of the RMB can be defined as the process by which the RMB plays a global monetary function and becomes the main currency for international trade and investment pricing and settlement,financial transaction and international reserve in the global market.The internationalization of RMB has important strategic significance.From the macro perspective.First,it will help China carry out a higher level of opening,actively promote its financial opening strategy,enhance China’s international status,and gain greater economic and financial discourse power.Second,it will help China to improve its resistance to financial crises.Third,it can promote the reform of the international monetary system,explore the construction of a new global financial infrastructure and international monetary coordination mechanism,and improve the international financial system.From the micro perspective.On the one hand,it will help reduce the exchange rate risks and transaction costs of governments,enterprises and individuals,facilitates foreign economic exchanges,and promotes the development of foreign goods and services trade.On the another hand,it will help advocate respect for international rules and standards,and further promote the reform of China’s financial market,optimize the financial market system and better serve the real economy.At present,compared with China’s economic aggregate volume and financial market scale,there is much room for the development of RMB’s international share and pricing power.This paper is divided into nine chapters to study the related issues of RMB internationalization.The first chapter is the introduction,which expounds the research background,significance and research methods,and puts forward the innovations and shortcomings of this paper.The second chapter combs the currency internationalization theory and the research literature of RMB internationalization.From the Marxist monetary theory,the definition of currency internationalization,main functions of international currency,influencing factors of currency internationalization,the monetary system,etc.,the theory of currency internationalization has explained.In terms of the research literature on RMB internationalization,it mainly involves exchange rate,capital account liberalization,joining the IMF Special Drawing Rights(SDR)on RMB internationalization,the relationship between RMB internationalization and the construction of the “Belt and Road”,and the promotion strategy and path of RMB internationalization.The third chapter analyzes the current situation of RMB internationalization.At present,the functions of RMB in international payment and settlement,pricing,investment and financing,and reserves are gradually enhanced.The domestic and overseas circulation mechanism of RMB is operating smoothly.The RMB settlement of cross-border trade and the offshore RMB market are interacting.China is actively carrying out bilateral currency swaps,which not only provides liquidity support for countries in crisis,but also helps manage the exchange rate risk of cross-border trade and investment.However,RMB internationalization still faces many problems.The domestic financial market needs to be improved,the development of RMB offshore market is restricted,China’s import and export bargaining power is low,and the opening of capital account may trigger financial risks,and it is restricted by the international monetary system.The fourth chapter discusses the new situation of RMB internationalization.In terms of the development situation of China’s open economy,the overall scale of China’s economy continues to expand and the economic structure continues to optimize.It will give full play to the advantages of the domestic super-large market and the potential of domestic demand,promote the construction of a new development pattern,and promote the transformation and upgrading of China’s open economy.In terms of the global economic situation,the structural imbalance of the global economy has not yet been improved.The implementation of ultra-low interest rate policies in some countries may push up commodity prices and trigger bank credit supply constraints.The shortage of global safe assets will lead to the increase of capital flow risk in emerging economies,and the risk aversion will urge investors to chase us dollar assets s,and caused the deterioration of the international debt situation of various countries.And the Sino-US economic and trade frictions have far-reaching effects.Meanwhile,the new novel coronavirus epidemic hits both the supply and demand side,and major economies in the world have been hit hard.The widespread easing of monetary policy is generally adopted,which will increase the uncertainty of global risks.The fifth chapter summarizes characteristics of the international monetary system and the experience of major international currencies.The current international monetary system is still facing the "Triffin Dilemma",and the future evolution direction is to expand the special drawing rights(SDR)and achieve multi-polar development of global reserve currencies.The U.S.dollar plays a leading international monetary role and provides international liquidity for the world.Through the commodity dollar repayment mechanism,oil and other bulk commodity transactions and the U.S.foreign debt dollar pricing mechanism,the U.S.dollar global circulation mechanism has been constructed.Through analyzing the process of Japanese yen internationalization,it proposes to learn from the experience and lessons of Japanese yen internationalization.The sixth chapter proposes that the RMB internationalization should be based on the construction of the “Belt and Road” initiative.The “Belt and Road” construction is of great strategic significance.The RMB internationalization and the “Belt and Road” construction should be promoted to form a synergistic linkage to meet the strong demand for infrastructure construction in the “Belt and Road”,thereby promoting economic and social development in the region.Meanwhile,in the energy sector,the function of RMB pricing and settlement for bulk commodities will be improved.And the construction of the Asian bond market and the opening of the RMB bond market will be promoted.At the same time,due to the particularity of financial risks that may occur in the construction of the “Belt and Road”,and Chinese-funded financial institutions still have shortcomings,it is necessary to strengthen the supervision of pro-cyclical cross-border capital flows and improve the risk management mechanism of foreign debt.The seventh chapter illustrates that RMB internationalization should focus on breaking through capital account opening.This paper clarifies the concept of currency convertibility and currency internationalization,the relationship between RMB internationalization and capital account opening.It analyzes the preconditions and path selection of capital account opening.By summarizing the practice of capital account opening in developed countries and emerging economies,and combining with the policy evolution,current situation and characteristics of China’s capital account opening,this paper points out the main considerations of China’s future capital account opening arrangements.The eighth chapter explores that RMB internationalization should actively respond to the new trend of digital currency development.This paper summarizes the basic characteristics of digital currency from the perspectives of definition,classification and advantages,and analyzes the "stable currency" Libra,which uses a variety of legal currencies as asset reserves.Moreover,the money supply mode and overall operation framework of digital RMB have been analyzed.It is necessary to learn the experience of the Bank of England,the Central Bank of Canada and the monetary authority of Singapore in the research and development of digital currency.Actually,non-legal digital currency is difficult to sustain,but Digital RMB will help to establish the new position of RMB internationalization,expand the new space of RMB internationalization and add new impetus to RMB internationalization.The ninth chapter proposes policy recommendations.In the process of comprehensively deepening economic and financial reforms and opening up,we should orderly open capital account,gradually promote the marketization of exchange rate,and establish a market-oriented modern financial system.Meanwhile,the construction of the “Belt and Road”,the international monetary system reform and digital RMB development should be actively promoted.