Research On Perfecting The Construction Of Offshore RMB Bond Market

Afterthe2008financial crisis, the USD-dominated international monetary systemexposed its fragility, which makes more and more economy call for establishing a newinternational financial order. As the internationalization of the RMB rising to thestrategic level, the construction of offshore market of RMB bonds is playing anincreasingly important role in risk isolation and reform in interest rate&exchangerate.This paper builds the logic chain that is what the situation is, what the advantagesare, what is the restriction factor, and the potential risk of developing.Firstly itreviews the research from China and abroad in3aspects, namely theinternationalization of the RMB, the construction of offshore financial market and theoffshore RMB bonds market.Based on these, it discusses the distribution of offshoreRMB bonds market, the size of the market, major participate and the product range&duration.Then it sums up the development experience of offshore financial marketfrom America and Japan. Furtherly it analyzes the economic environment home andabroad of our country in depth. While the rapid development of the offshore RMBbonds market relies on the expectation of RMB appreciation.There even existsimbalance on the development of the market in different financial center.And what’smore, we need to deal with the linkage mechanism between offshore and onshoremarket properly and moderately. All these problems restrict the development ofoffshore RMB bonds market.Besides, there are regulatory and control risk, liquidityrisk, interest rate and exchange rate volatility risk, need to be managed and avoidedproperly.With the restriction of the capital account, the construction of the offshore RMBbonds market should pay attention to strengthening the RMB internationalizationstrategy. To promote the reform of the capital account management, we should stick tothe principle of initiative, progressive and controllable. In order to enhance the marketcompetitiveness of the offshore RMB bond products, we should continue to improvethe benign reflow mechanism, and strengthen the active management of relationship between offshore and onshore markets. Besides, in the process of domestic interestrate marketization reform, we should enhance the contact with the offshore market,and constantly improve the offshore bond market interest rate term structure, so as togive full play to the pricing function of bonds market, and achieve the comprehensivedevelopment of the market.