The Effects Of RMB-Settling Border Trade On The Regionalization Of RMB

China development has been drawing more and more attention, because of the high growth rate, favorable balance of trade, and biggest international reserves. Especially during and after the Asia financial crisis, the RMB kept its value without devaluation earned the good status; the RMB circulating in the neighbor countries and being used as settlement currency make the study of RMB internationalization and regionalization a focus point.This paper is composed of four chapters. The first chapter introduces the study background of the RMB internationalization and regionalization. In this section the existed study is introduced totally. Scholars discussed the advantages and disadvantages of the RMB internationalization and regionalization from different viewpoints. The conclusion was that RMB internationalization would bring the advantages of seigniorage income, and it could also improve the international trade and investment, could bring the international financial resources, it can change the structure of international reserves that could avoid risks. Meanwhile, the RMB internationalization should bring the problems to China. It will become difficult to adjust the RMB circulation, the effect of monetary policy will be affected by the internationalization. Keeping the value of RMB and the stability of domestic finance will be a challenge mission. On the basis, some scholar pointed out the RMB internationalization or regionalization path, but, there is no agreement.The second section introduces the way of currency internationalization pushed by trade. Especially introduces the currency search model. In basic model set by Kiyotaki and Wright(1989), the currency equilibrium existence was proved on the assume of production and currency are undividable. On the"double coincidences of want"of swap gave the birth to fiat money. The model showed that some important factors could affect the currency internationalization from the trade field⑴cost of trade,⑵scale of trade,⑶net of trade. More people take part in the trades, a bigger trade net there will be. In this chapter, some theories about which currency could work as invoicing or settlement currency are also discussed and demonstrated. In trade relationship, the part has the advantages in producing, sale and market share gets the positive power to choose the currency as the invoicing currency. The currency with stability value in and used wildly should be selected. On the background of the theories, the paper checks the China's GDP and international trade, and discusses the position and conditions of RMB. The conclusion is: China's GDP has be growing quickly and the international trade developed to the 3rd place all over the world, but there is distance with USA, JAPAN and EU; the US dollar has the dominate status all over the world, also RMB faces the strong challenge against the Yen. It will be very difficult for RMB to develop to international currency directly. For this reason, the paper suggests that: the internationalization of RMB should be improved by the way of RMB playing as the settling currency in the international trade with the neighbor countries.The third chapter discusses the way of US dollar and Yen how to become the international currency. The experience of Yen's way could be the lessons of RMB with some different considerations. China has same problems with Japan and some are more serious. China has to do more work to improve her conditions for RMB internationalization in many fields.At the end of the paper, suggestions are giver from the macro and micro view according to the conclusions drawn in the first 3 parts. On the macro side, the government should push the economic development and financial reforming, improve the industry structure upgrade, change export good structures, and improve the border trade; on the micro side, the government should push the signature of settlement agreement and the execution of it, improve the coordination between the banks and customs which involved in the trade settling, to make sure the RMB settling moves smoothly. The supervision of RMB internationalization and regionalization should be improved to avoid the risks.