Yuan And The Yen Direct Trading Has An Important Influence On The Yuan Internationalization Process

International currency is defined as that a sovereign country’s currency is widelyaccepted in international trade, investment and finance, and it is used as aninternational common currency. Besides,it is held by private economic sector ormonetary authorities as an international reserve assets or liquid assets. Currencyinternationalization process can be seen as a national currency achieve some monetaryfunctions in other countries, achieving its medium of exchange, unit of measure, storeof value function of the process. In other words, when a country’s currency achievethe full three functions in the international community, the country completed theinternational currency.In recent years, China has a rapid economic development. China’s economy playsa more important role in the world, and the Yuan internationalization attractedwidespread attention. The Yuan internationalization refers yuan is wide used in theinternational community,and achieve a medium of exchange, unit of measure, storeof value function of the process. The Yuan internationalization is a response ofChina’s economic reform. Meanwhile, the world well-functioning capital marketsneed the Yuan internationalization.However, from the current situation, the Yuaninternationalization is still on a low level. We found that the influence of the "dollaranchor" is the most important reason."The dollar anchor" exists not only led toChina’s rigid exchange rate regime, and the devaluation of U.S. dollar led to a largenumber of foreign exchange reserves shrink. Therefore, the process of the Yuaninternationalization also can be considered as the process of getting rid of the "dollaranchor".On June1,2012, the yuan and the yen direct trading is started in Shanghai andTokyo markets,It is a initial attempt for getting rid of the "dollar anchor" and achievethe Yuan internationalization. Yuan and the Yen direct trading has an importantinfluence on the Yuan internationalization process, and it is the core issue of thisthesis. This thesis is divided into five parts, the first part elaborates the theory of theYuan internationalization, and explains the meaning of the Yuan internationalization.The second part describes the development process of the Yuan internationalization. From the perspective of the international monetary functions, indicating that the Yuaninternationalization is still on a low level, and explaining that the influence of the"dollar anchor" is the most important reason.The third and fourth part is the core partof the thesis.This part analyzes the condition of the Yuan and the Yen directtrading,and describes the relevant constraints of the Yuan and the Yen direct trading.Yuan and the Yen direct trading has an important influence on the Yuaninternationalization process,the fouth part analyze this issue. The fifth part is theconclusion.The conclusion is that: In the short term, Yuan and the Yen direct trading has alimit influence on the Yuan internationalization process. However, in the long run,Yuan and the Yen direct trading has an important influence on the Yuaninternationalization process.First, it will promote the Yuan cross-border tradesettlement, the Yuan exchange business development, push the yuan to achieve the"medium of exchange" function; Second, it would promote the Yuan exchange rate toachieve independence, and promote Tokyo became the second Yuan offshore market,in the two ways,the Yuan will expand its influence in Asia and the Yuan will becomeAsia’s "anchor currency", so that the"measurement unit" functions will be achieved;Third, push the yuan to become a reserve currency of the developing countries, toachieve "store of value" functions; Fourth, the Yuan and the Yen direct trading willplay a good "demonstration effect" to promote the Yuan direct deal with the euro inthe International Monetary in the future. Therefore, in the long term, Yuan and theYen direct trading plays a positive role in promoting the Yuan internationalizationprocess.