Seigniorage And International Experience For Reference In The Process Of RMB Internationalization

When a country’s currency circulate out of that country and become international reserve currency,the holder of that currency include not only the resident of that home country,but also the nonresident.Issuing country is endowed the ability of charging interest-free loan.So,the international reserve currency issuer’s seigniorage earning include not only the difference between the face value of that currency and issuing cost,also,it includes the net earning of financial asset caused by the internationalization of that currency.In the international monetary system,depending on the international status of currency,countries such as America and Japan purchase other countries’commodity and labor,and directly or indirectly invest,through massively issuing.Recently, with the China’s economy develop,socialist market economy reform deepen,China are more and more involved in international trade and capital flow.RMB’s currency value is steady and are closer and closer to that goal of fully convertible.This greatly increase RMB’s international prestige, further increase the progress of internationalization.RMB internationalization level unceasing enhancement, brought huge benefits to China, one of the most impottant, the most direct benefit is seigniorage profit.In order to better analyze the process of RMB internationalization seifniorage,this paper firstly explain the history of seigniorage conception,introduce the way to measure the seigniorage and opportunity cost seigniorage,calculate the way to measure the seigniorage from the government’s point of view.Secondly,this paper respectively calculate the dollar, Japan yen and euro’s seigniorage earning,and evolutionary gaming theory model to analyze the internationalization of RMB,predict the seigniorage earning of RMB in the next ten years.Through calculating several countries’s seigniorage,this paper draw the conclusion that:Firstly,after the internationalization a country’s currecy,that country can impose seiniorage globally through several ways,such as issuing bonds and financial innovation to maintain the economic growth and to seperate the risk of financial market. Secondly,if the country experience economic slump,foreign reserve increasing continuously,this will cause that country’s seigniorage earning drop or even reverse.Thirdly,in a monetary union,although the inflation targeting will decrease most of the seigniorage earning,the internationalization of monetary union deepen and demand in the international market increase,those will bring considerable seigniorage earning to the member countriesCombining the internationalization experience of the dollar,Yen,Euro with the evolutionary gaming theory, the writer propose several suggestion:Firstly, comprehensively increase our country’s strength,build a wide and deep financial market, adopt solid monetary policy. Secondly, issuing more RMB bonds overseas, increase the efficiency of RMB.Thirdly, a stable RMB will influence the confidence in investor to RMB.The more stable RMB is,the less likely will the reverse of seigniorage happen.Fourthly, in the process of RMB internationalization, we should maintain our relation with other country.Fifthly,in the process of the reform of international monetary system,China should gain more voice, and this is the main method to remove the obstacle in the internationalization of RMB.