Study On RMB Internationalization And Shanghai International Financial Center Construction

Internationalization of currency and formation of international financial center represented a country's economic strength. Internationalization of currency and formation of international financial center had synergistic effect which contained external economies of scale and transaction cost savings.This paper attempted to combine internationalization of currency with formation of international financial center to study the synergistic effect between them and how to promote the internationalization of RMB and the construction of Shanghai international financial center. This paper mainly contained five chapters. Chapter one described the background and significance of this paper, reviewd the present research and introduced the research method and framework. Chapter two elaborated the theory of international currency and international financial center. Then according to the theory of economies of scale and transaction costs, it proposed the theory of synergistic effect:there was a mutually reinforcing effect between internationalization of currency and formation of international financial center. Meanwhile, each of them can generated the effect of external economies of scale and transaction cost savings. Chapter three made a thorough analysis on the formantion of London, Newyork, Tokyo and the inemationalization of sterling, U.S. dollars, Japanese yen. There was a common point among their process that the internationalization of currency and formation of international financial center were almost synchronization. Besides, currency's international status played a key role in the formation of international financial center, while the formation of an international financial center also promoted the internationalization of the currency. Based on the analysis of the previous chapters, chapter four studied the international and domestic environment which showed it was a very good opportunity to establish the agovernment-led model to promote the internationalization of RMB and the construction of Shanghai international financial center:on the one hand, it suggested accelerating the formation of Shanghai international financial center by the use of RMB in cross-border trade settlement and the convertibility of RMB capital account. On the other hand, it proposed to establish advanced financial market and RMB international settlements center in Shanghai which would promote the internationalization of RMB stablely. Chapter five was the summary of the whole paper, policy recommendations and the inadequacies of paper.