The Impact Of Hong Kong Offshore RMB Market On Mainland Monetary Policy

Currently, the Hong Kong offshore RMB market has been built. Fast growth of RMB deposits, cross-border settlement expansion, and innovation of RMB product and the update of clearing mechanisms mark the Hong Kong offshore RMB market has entered into a rapid development period. Developing the offshore RMB market has great significance to China. From the international perspective, it can provide a buffer zone for RMB back-flow, and at the risk of controllable circumstances, it can promote the gradual liberalization of capital account, and finally promote RMB internationalization. From the domestic perspective, the offshore RMB market can promote market-oriented reform of interest rates and the exchange rate formation mechanism reform, accelerate financial deepening, promote the development of international business, and effectively alleviate excessive pressure on foreign exchange reserves. But with the development of offshore RMB market, the scale will expand greatly and the impact of offshore RMB on mainland’s financial system will also be more increasingly significant. This paper focuses on the influence of Hong Kong offshore RMB market on the mainland’s monetary policy, and analyses from four aspects: interest rate, exchange rate, banking system and capital flow. Finally this paper puts out some suggestions to counter the influence and promote the construction of Hong Kong offshore RMB market.