Comparison On Currency Internationalization Of BRICS Countries And The Problem Of RMB Internationalization

The U.S. financial crisis, which broke out in2008, has brought heavy losses to the development of the world economy. The United States has been taking Quantitative easing policies to transfer the loss due to the financial crisis, which brought about the substantial depreciation of dollar and the shrink of U.S. dollar reserve owned by other countries in the world. As a result, U.S. dollar’s status of major international currency whether can be continued or not has been quested. At the same time, the emerging market countries represented by the BRICS countries have reached high-lighting achievements. With the improvement of the comprehensive strength of the emerging market countries, the conditions of currency internationalization have gradually formed. And the reform desire of International monetary system is promoting the development of the emerging market countries’ currency internationalization. The BRICS countries, as a representative of the emerging market countries, are playing increasingly important role on the international stage, and the internationalization of their currency is prominent. From the result, we can see that it is the Russian ruble that earliest started the process of currency internationalization while it is Chinese RMB that has the most international prospects. Although the conditions of RMB’s internationalization is rapidly growing and it has obtained some achievements in the process of internationalization, there are still some obstacles such as the capital account is not fully open, the financial market is not mature enough and the RMB exchange rate system is not perfect etc. Therefore, how to take reasonable policies and measurements to promote the process of internationalization of the RMB has become an urgent need on the road of RMB internationalization.Currency internationalization specially the RMB internationalization has been the hot issues of concern by the domestic and foreign scholars. There are many literatures about the internalization of U.S. dollar, pound, Euro and other main international currency at home and abroad, however, there are not so many literatures about the currency internationalization of the emerging market countries. For this reason, it is quite necessary to conduct in-depth research on BRICS countries’currency internationalization as representative of the emerging market countries. There must be a certain theoretical and practical significance for currency internationalization.The research methods of this paper are quantitative analysis, qualitative analysis and comparative analysis. It adopts the methods of quantitative analysis and comparative analysis to the measurement of the degree of the BRICS countries’ currency internationalization. On the basis of qualitative analysis for the determinants of currency internationalization, it gives comparative analysis for the main indicators between the BRICS countries, such as national GDP account for the proportion of the world’s GDP, currency stability, the degree of openness of the capital account, as well as the proportion of the export share of world exports. At last, by comparing the degree of internationalization of the BRICS countries currency RMB, we find that though the degree of internationalization of RMB is not the highest, the RMB has the most international potential and strength.This paper is divided into six chapters. Chapter one is the introduction, which mainly introduces the research background and the significance of the topic of this paper. It also reveals the necessity of the current international monetary system and the prospect of internationalization of the BRICS countries’currency. Chapter two is the literature summary of currency internationalization. It summarizes the domestic and foreign currency of international literatures in terms of definition, determinant and the measurement of the currency internationalization. This chapter also gives a brief summary of the BRICS countries currency internationalization. Chapter three is the determinants of currency internationalization. The main factors to affect the internationalization of the currency include economic factors, historical factors and policy factors etc. It detailed analyses the contents of these three factors. Among them, economic factors including economic strength, the stability of the monetary value, the openness of the capital account and a country’s exports accounted for the proportion of world exports. Historical factors mainly refer to the inertia of the reigning international currency, and the policy factor refers to the attitude the governments towards to the currency internationalization. Chapter four is the comparative analysis of the degree of internationalization of the BRICS countries’ currencies. In this chapter, it has analysed the process of the BRICS countries’ currency internationalization in the perspective of the determinants of currency internationalization, and measures the degree of the BRICS countries’currency internationalization on the basis of proportion of a country’s currency in the foreign exchange market. It draws a conclusion that it is Chinese RMB that has the most potential of international currency. Chapter five is the analysis of the problem of the internationalization of the RMB. This chapter provides a brief analysis of the current status and process of the internationalization of the RMB, as well as the current problems of RMB internationalization. Combined with the issues, the author gives her own suggestions to RMB’s internationalization. Chapter six is the conclusion paragraph. In this chapter, it briefly summarizes the whole paper.