Path Analysis Of The Internationalization Of RMB

It is an inevitable trend of the internationalization of RMB. With the growth of China’s economic and international competitiveness, the circulation and influence of RMB in the Asian region are increasing. At the same time, with the development of the Asian economic trade zone and the cooperation of Asian monetary and financial, RMB become an indispensable part of Asian Currency. It is a valid path of RMB to be an international currency if RMB take part in the Asian Currency.This article divides the path of RMB international monetary into two models, namely independent monetary mode and monetary union international mode. The independent monetary mode in this paper is:China will not join the currency union. Namely RMB will exercise the functions of international currencies as an independent sovereign currency. The second mode is:China will join in Asian Currency union. Namely it will be replaced by Asian Currency.After reviewed international monetary theory and the theory of Optimum Currency Areas respectively, the article selected five areas of indicators to analysis of the prospects for international in independent monetary mode, and three areas of indicators to analysis of the prospects for international in monetary union international mode. What is more, with the experience of U.S. dollar international route, cost, revenue, and the sub-prime crisis, the paper said:In the process of the internationalization of RMB, China should pay attention to the rich effect, and should speed up the restructuring of domestic industries and stimulate domestic demand and expand the import scale. Similarly, with the experience of the euro international route, cost, revenue, and the debt crisis, the paper said:China should fully understand the consequences of loss of monetary independence and the responsibility of big open economy in crisis, China should strive to become the anchor currency of the region.In the analysis of independent monetary mode part, the article analyzes the prospects for international by five indicators. They are China’s macroeconomic situation, China’s economic openness, China’s international balance of payments and international trade structure, China’s financial market operating conditions, operating conditions and the mechanism of exchange rate. The paper concludes that RMB can promote to a higher level of the international stage.In the analysis of monetary union international mode part, the article analyzes the prospects for international by three indicators. They are China and East Asian countries, macroeconomic similarities, China’s trade structure in East Asia and China and East Asia’s financial integration. The paper concludes that RMB has better to be a regional anchor currency at present because the prospect of Asian Currency is full of uncertainty and longevity.Through analysis, the conclusions are as following. Firstly, internationalization of the RMB at this stage should give priority to an independent international monetary mode. Secondly, the task of the RMB internationalization at this stage is to promote to be a regional anchor currency. Thirdly, the steps of RMB internationalization should be followed by the peripheral, regional, to the path of international.Based on these ideas, the recommendations are as following.Firstly, China should give priority to international mode of an independent currency, but it does not exclude the Asian monetary cooperation.Secondly, China should vigorously promote industrial restructuring and upgrading, in order to maintain economic growth, and adjust the structure of the international balance of payments. At the same time China should focus on stimulating domestic demand, and gradually turn the way of export-dependent economy into domestic demand dependent economy.Thirdly, China should widen the overseas supply of RMB, and accelerate the construction of an international financial center. China should encourage domestic enterprises to invest overseas.Fourthly, China should improve the pricing mechanism of the RMB exchange rate. China should continue to implement the basket of currencies pegged strategy, and can reform into crawling peg exchange rate system in the long run.China is the world’s second largest economy. At this stage, China should keep the economy healthy growth, and accelerate the reform, and promote to be the regional anchor currency at this stage.