Study On RMB Settlement In Cross-border Trade

Due to the global financial crisis of2008, the developed countries have faced stress in the money markets, and there is great influence on the countries which held huge amount of dollar reserves because of the exchange rates of the international currency with wider fluctuation margin. At the same time, the comprehensive strength of China has been greatly enhanced and China plays a more and more important role in the world economy. Because the CNY currency remains very stable, it is used as a settlement currency and payment currency in the surrounding countries and regions.By the end of2008, the Chinese government has formally carried out the pilot program of using RMB in cross-broader trade settlement in some areas, and this program has great strategic meanings for the regionalization and internationalization of RMB. However, due to the unreasonable industrial structure, the unscientific RMB outflowing mechanism, the underdeveloped financial system, the defective financial market, the incomplete marketization process of interest and exchange rate, the low approbation of non-residents for foreign currencies, and the restrictions on cross-border RMB trade settlement made by the developed countries, there is a bottle-neck in using RMB in cross-border trade settlement.At present, RMB has not become an international settlement currency, and the regionalization of RMB is a long process. In order to make RMB an international settlement currency, government must think further about this question, give preferential policy, and establish motivation system to promote the cooperation of the Central Bank of China with other central banks of foreign countries or regions. The government should also facilitate the collaboration of the financial institutions to gradually accelerate the process of the pilot program of using RMB in cross-border trade settlement. In this way, more and more enterprises can benefit from the convenience and efficiency of RMB settlement. By enhancing the international reputation of RMB, the neighbouring countries could trust the convenience of RMB as an international settlement currency and avoid risks in the international trade market. It can also steadily develop the RMB into a strong currency which plays a dominant role in the international market. As a result, the great shock on China’s foreign trade brought by international financial situation can be alleviated.Besides, the negative effects on the developing economy caused by the declining economic and financial environment of developed countries can be avoided. At the same time, if foreign countries pose economic sanction on the banks of China, we can avoid the negative effects caused by the deprivation of settlement right through RMB settlement, so the financial environment can remain stable and healthy.Guided by the regional economic integration theory, currency substitution theory, optimal currency area theory and international trade settlement currency selection theory in international finance, the author conduct the research on the basis of various theories, history and practical cases in this paper. By analyzing the history, the development status, the internal and external environmental conditions and the existing problems of using RMB in cross-border trade settlement in China, the author verify the importance and necessity of carrying out cross-border RMB trade settlement. And the author has proposed some countermeasures from the perspective of regulatory environment, clearing and payment system, policies and regulations, offshore RMB market construction.