The Research On Current Progress And Issues For Renminbi Cross Border Trade Settlement

Since the beginning of21century, with a quick boost on Chinese economic and foreign trade, China is more interacted and related globally with other countries. RMB was used more in cross-border trade in the foreign trade of China. Especially after the outbreak of global financial crisis in2008. the exchange rate for major international currency, such as USD and EUR. fluctuated greatly. The inherent defects of current global monetary system were revealed. The underlying risk was higher for China and its foreign trade enterprises. In the Jul of2009. the pilot run of RMB cross border trade settlement was quite meaningful under such circumstance. It helped to increase the trade volume between China and its trade partners, as well as acting as a way to remove foreign exchange rate fluctuation risk. The next policy which expanded the pilot area and removed the pilot company requirement for export settlement in RMB in Feb. of2012, facilitated the RMB cross border trade settlement a lot. During the peiord for three years and a half since pilot run, with the support from government, banks and companies worked closely to make a big progress on RMB cross border trade settlement. The annual settlement volume arrived at RMB2.9trillion in2012. with trade partners in206countries/territories around the world.Though RMB cross border trade settlement had achieved a good progress, there are still some issues and constraints which need our attention. It is still an important topic on how to promote the RMB cross border trade settlement consistently. This paper started from the Monetary Competition Theory. Optimal Currency Area Theory, international trade settlement theory and relevant study on RMB cross border trade settlement. After summarizing the background, current status and impact, the paper listed the contraints which hindered the development of RMB settlement, including the habit of currency settlement, lack of RMB overseas investment and hedging channels and the settlement system which is pending for further improvement, etc. Finally the relevant strategies were recommended from the below perspective:changing the preference currency habit, enhancing the settlement channel, building a mature financial market, and strengthening the support from government, etc.