The Study Of The Impact Of Offshore Financial Market Development On Currency Internationalization

Firstly, this paper analyses how the offshore financial market influence theprocess of currency internationalization from the points of character, mechanism andfunction of offshore financial market. Secondly, after summarizing theinternationalization of four currencies, namely the dollar, the euro, the pound and theyen, we can take example by the development of offshore financial market of majorinternational currencies. Thirdly, choosing variables and using empirical analysisverify the conclusion. In the last, based on the results of study mentioned above, thisarticle puts forward some feasible and operable advice.Throughout the history of currency internationalization, each currency has aspecial opportunity. The development of offshore financial market guarantees thedollar’s international currency status. The same thing occurred at the beginning ofJapanese Yen offshore financial market development, however, the followingresident-to-resident mode hindered the process. The restriction of developing pondoffshore financial market by the UK is a major factor of pond diminished. Marc is amain factor for the international currency status of Euro, and the Marc offshorefinancial market is the footstone. Hence, international currency status of Euro cannotbe separated from the development of offshore financial market.The results of empirical analysis shows that the development of the offshorefinancial market, the increase of economic strength, and enlarging opening to theworld can significantly promote positive currency internationalization. Theinternational economic crisis provides opportunity for internationalization of RMB,and meanwhile China has accomplished the necessary requirements for currencyinternationalization. Currently the large downturn pressure of economic growth inChina, the incomplete of financial market, as well as the strict control of capitalaccount inhibit the currency internationalization. According to some internationalexperience, China should seize the opportunity, greatly promote the offshore financialmarket, deeply perform revolutions to ensure a stable economic growth, loosen thecontrol of capital account and complete domestic financial market to promotecurrency internationalization, and finally make RMB be the main internationalcurrency.