An Analysis Of The Influence Of Renminbi Internationalization On Asia

Because of the global financial crisis in 2008-2009, renminbi(RMB) internationalization is promoted by Chinese Government with the purpose to improve its international status, reduce reliance on the US dollar(USD) and advance domestic structural reform. The improvement of RMB internationalization is not only be seen in cross-border trade settlement, but also in the offshore RMB markets. RMB internationalization has broadened huge impact on not only the Chinese economy but also other emerging market economies. It brings to emerging economies another alternative opportunity for domestic currency price and foreign exchange reserves investment. Following the rise of China’s position, the strengthened of economic and trade relationship between China and Asian economies, and China’s increasing importance status in the world economy, China’s national currency will be considered as international currency start from Asia. As regional internationalization of RMB is double-edged, China should consider the trade-off between costs and benefits of RMB internationalization, if he wants to eliminate the financial risks and maximize the benefits through this process. RMB internationalization is a dynamic process, it’s necessary to implement the phased strategy and the corresponding policies according to the different level of the process.From the perspective of Asia, together with the rise of China, the economic and trade relations between China and the World, especially between Asian countries will be further improved, the integration of Asian market will be rised. “One market, one money”, In one market, only one currency which treated as a common measure of value, will eliminate the transaction cost of trade and capital mobility, provide more chances in trading, increase the size of trade, efficiency and national welfare. China and Asia increased economic integration size will make bigger the Asian market, and meanwhile lead to the demand for the common measure of value. The promotion of RMB status is an inevitable result and RMB will gradually replace the other currencies in Asia.In this paper, the renminbi internationalization which speeded up by Chinese government is examined. Through trade and settlement, the raise of renminbi has made it become Asia’s new reference currency, surpassing the US dollar. The effects of the financial crisis and the support from the region’s economic and financial integration have led to the emergence of RMB’s status. As a reference currency of necessity or choice, the renminbi’s development in the region will weaken the US dollar’s current global dominance position. RMB internationaliation can not be seprated from RMB regionalization, while in this step, Asia economics are also be affected. This thesis will mention how China expand the use of its currency and the posibility of RMB to become a regional currency.