Empirical Study Of RMB And YEN Cross-border Trade Settlement Influence Factors

The inherent defects of current international monetary system were revealed bythe explosion of global financial crisis in2008.The exchange rate for majorinternational settlement currency, such as USD and EUR fluctuated greatly. Theenterprises of china and neighboring countries and regions will take more exchangerate risk when use the vehicle currency in trade settlement. In order to help companiesavoiding exchange rate risk and promote the steady growth of China’s foreign trade,RMB cross-border trade settlement was launched formally by China government inJuly2009. However, the pilot work of RMB cross-border settlement didn’t enjoy aplain sailing at the beginning and varieties of problems appeared in the developmentprocess. Therefore, the analysis of RMB cross-border trade settlement currentsituation and its promoting and restricting factors plays an important role for thepromotion of RMB cross-border trade settlement and internationalization of the RMB.Firstly, this dissertation makes a brief comment on the research background andcontent. Secondly through the general summing-up of the main theories on settlementcurrency selection in the foreign trade and literature about the RMB cross-bordertrade settlement, it points out the main factors that affect trade settlement currencychoice. The empirical results are as follows:(1) The appreciation of RMB and yen isboth promoting the use of producer currency in trade settlement.(2) The developmentof financial markets in Japan failed to promote the producer currency pricing. In termsof financial market reform, China should be vigilant of "refinancing" game.(3) Thedifference between china and us interest rates is good for the expansion ofcross-border RMB trade settlement and the difference between Japan and us interestrates works oppositely.(4) The features of export product structure in both China andJapan weaken the role of high-tech products to promote local currency settlement intrade. Finally, this dissertation summarized the yen experiences and lessons andpresents some advices to improve the further development of RMB cross-border tradesettlement according to the results of theoretical and empirical analysis.