Research On Regional Economic Cooperation And RMB Internationalization

Under the background of the profound adjustment of the international monetary and financial system caused by the technological transformation of digital currency and the conflict between Russia and Ukraine,China promotes trade and investment cooperation,which provides a favorable development environment for the process of RMB internationalization.In November 2020,China signed the regional comprehensive economic partnership agreement(RCEP)with Japan,South Korea,Australia,New Zealand and ASEAN countries,which is an important measure for China to carry out regional economic cooperation.There are new development opportunities for the internationalization of RMB.Should China seize the opportunity to promote the internationalization of RMB? How to improve the currency anchor status of RMB and the international reserve share of RMB in RCEP region? What is the effect of economic cooperation and RMB internationalization policy on the development of RMB internationalization? Do different economic cooperation variables have different effects on RMB internationalization? These questions have important theoretical and practical value.This paper wants to answer these questions.Firstly,this paper summarizes the theory and historical experience of currency internationalization,defines the mechanism of economic cooperation to promote currency internationalization,and studies the potential of developing RMB internationalization through RCEP agreement.By using the RMB index to measure the development degree of RMB internationalization and analyzing the structure of RMB internationalization development,this paper finds that the overall development level of RMB internationalization is low and the development structure is uneven,so there is a practical need to promote RMB internationalization.China is the center of RCEP regional value chain.There are close trade and investment with RCEP countries,and The trade and investment cooperation between China and RCEP countries is very close.China has signed many RMB international cooperation policies in RCEP countries.Therefore,RMB has the potential to develop into a major regional currency through regional economic cooperation under the framework of RCEP agreement.Secondly,this paper empirically tests two typical facts of the cost-benefit of currency internationalization,and makes it clear that China should seize the development opportunity to promote the internationalization of RMB.On the one hand,this paper confirms that currency internationalization helps emerging market countries prevent systemic banking crisis and sovereign debt crisis.For countries with bank oriented financial system,currency internationalization plays a stronger role in preventing systemic banking crisis.At the same time,there is no significant relationship between currency internationalization and currency crisis.Therefore,China should not slow down the development pace of RMB internationalization because of fear of financial risks.On the other hand,this paper confirms that RMB internationalization can effectively improve the exchange rate transmission effect of China’s exports,stabilize the export price of products,and increase the ability of enterprises to deal with exchange rate risks.Therefore,in order to improve the efficiency of external circulation development,China should continue to promote RMB internationalizationFinally,this paper examines the feasibility of promoting RMB internationalization through economic cooperation under the framework of RCEP agreement.On the one hand,this paper examines the impact and mechanism of three market driving variables:trade cooperation,direct investment cooperation and securities investment cooperation on the currency anchor effect of RMB.It is found that bilateral trade cooperation,direct investment cooperation and securities investment cooperation can significantly increase the currency anchor effect of RMB,which is established in both developed and emerging market countries;After the "811 foreign exchange reform",the role of trade cooperation on the RMB currency anchor effect has been strengthened,the role of direct investment cooperation on the RMB currency anchor effect remains unchanged,and the role of securities investment cooperation on the RMB currency anchor effect is no longer significant;This paper further investigates the nonlinear effect of economic cooperation variables,and finds that there is a U-shaped relationship between trade cooperation and direct investment cooperation and the currency anchor effect of RMB after the "811 foreign exchange reform",and there is an inverted Ushaped relationship between securities investment cooperation and the currency anchor effect of RMB.The degree of bilateral trade,direct investment and securities investment cooperation between China and RCEP countries is located on the right side of the U-shaped(inverted U-shaped)curve,Therefore,China should actively expand bilateral trade and direct investment with RCEP countries,and reduce the adverse impact of securities investment cooperation on RMB currency anchor effect by improving the depth and breadth of RMB financial market.This paper examines the role of RMB internationalization policy on RMB currency anchor,and finds that more RMB internationalization policies signed between China and partner countries can significantly improve the currency anchor effect of RMB.Moreover,with the increase of trade cooperation,direct investment cooperation and securities investment cooperation,the RMB internationalization policy has a stronger effect on the currency anchor effect of RMB.Therefore,RMB internationalization policy and economic cooperation complement each other.On the other hand,this paper examines the impact of economic cooperation on the holding of RMB international reserves.Based on the theoretical analysis of the two countries’ intertemporal international reserve demand model,this paper finds that trade cooperation can improve the intensity of partner countries’ holding RMB international reserves,direct investment cooperation can expand the scope of holding RMB international reserves,and securities investment cooperation has no significant impact on RMB international reserves;This paper examines the complementary effects of cross-border trade settlement,RMB overseas loans and currency anchoring on the holding of RMB international reserves.It is found that cross-border trade settlement has no significant impact on the holding of RMB international reserves.Overseas RMB loans can effectively expand the scope and intensity of holding RMB international reserves,and countries anchored in US dollars or euros are less likely to hold RMB international reserves.This paper further examines the effect of RMB internationalization policy on the holding of RMB international reserves,and finds that more RMB internationalization cooperation policies between China and partner countries can significantly improve the scope and intensity of holding RMB international reserves,but the effects of various cooperation policies are different,among which the effect of bilateral local currency swap is the most stable.In addition,maintaining a low inflation rate and RMB appreciation will also help to improve the international reserve status of RMB.This paper holds that China should use the RCEP agreement to cultivate the real demand of RMB by strengthening trade and investment cooperation,create a good external environment for RMB through the RMB internationalization cooperation policy,and cultivate the use potential of RMB in international investment and financing by deepening the reform of the financial system.Based on the investment and trade circle of RCEP Free Trade Zone,China should first realize the internationalization of RMB in RCEP region,and then further develop the internationalization of RMB.