Research On The Improvement Of RMB Payment Function Under The Perspective Of Oil Pricing

As the world’s most significant and staple resource product, oil attracts the attention of the governments all over the world since its important strategic military position. Today the battle of energy becomes more and more fierce, and also the competition of oil pricing currency quietly started. Since the U.S. leadership in the international monetary system, international trade in oil transactions are mostly settled and priced in dollars, so in the world, there is a huge dollar-denominated oil system. The concept of petrodollar not only indicates the fact that international trade in oil transactions are mostly settled and priced in dollars, but also implies the influence of the United States on oil price formation. Petrodollar helped United States to earn a huge amount of wealth but brought losses to other countries. So the voices of weakening the dollar’s international status have become stronger. As an emerging economy, the demand for oil of China is rising. Since1993, China has become a net importer of oil, the foreign dependency rising. If we can improve the RMB’s payment function through oil pricing, not only the internationalization of the RMB can be prompted, but also can be beneficial for China’s future economic development.This paper describes an overview of the international oil market from four aspects:supply and demand challenges, the spot and futures markets, the developments and challenges of petrodollar. Then it introduces the status and trends of China’s oil development, from the oil supply and demand, technical and policy analysis of the regulatory these three aspects to analyze the real reasons for the lack of oil pricing. The two parts together reveal the opportunities and challenges of implementing RMB oil pricing. Following that is the focus of the paper, using bargaining game model to explore the how the RMB’s weak position in the oil pricing system affects the rights to speak on oil pricing of China. Then through the other two game models, namely the sub-game perfect model and perfect Bayesian model, analyzes the possibility of RMB entering the U.S. petrodollar system. It also describes the features and developments of euros and rubles. Finally, according to the China’s actual situation, from the development of financial markets, the development of policies and regulations on energy security and promoting cooperation with other countries these three aspects to make suggestions on policies and proposals in how to win the interests in the game with US so as to strengthen our voice in the pricing of oil, improving the RMB payment function and thereby open up a new path of RMB’s internationalization.