The Research Of RMB Internationalization On Domestic Prices

In recent years, with the rapid development of economy, China’s international status is rising gradually. At present, China has become the world’s largest trading nation and the world’s second largest economy. Since human society entered the era of national sovereignty currency, every great nation economy accompanied by rising international influence of the national currency. To enhance the international currency status of the pound and the dollar are based on the country’s economic development, and eventually become an international currency. Since entering the 21st century, the laws of history is repeating itself and the whole world is concerned about the RMB. China economy has copied the rising miracle in Germany and Japan. Along with the improvement of China’s international status, increasing economies of scale, and strong economic development momentum, investors and policy makers are hoping the RMB become a new international currency. Since July 2009, China’s official launch cross-border RMB settlement of the pilot, the process of internationalization of RMB is accelerating. RUC released the "RMB internationalization Report 2015" shows that the end of 2014, RMB internationalization index is 2.47 which indicates a substantial increase in the growth rate. The RMB join SDR at November 30,2015 and will soon become the world’s third largest currency. In the process of the internationalization of the RMB, inevitably accompanied by the process of capital account open, exchange rate fluctuations, financial reform and other. Thus it will inevitably have a significant impact on China’s macro economy, financial market and microeconomic indicators. The price in the open economy as an important economic variable, RMB internationalization will inevitably lead to price level fluctuations. The article considers RMB internationalization as a process, and exchange rate fluctuation rate, capital account openness and financial deepening degree as a variable to study the impact on the price of our country, so that China’s monetary authorities and policy makers in the process of RMB internationalization provides theoretical and empirical basis to control price stability.The first chapter mainly expounds the research background and significance, and from the three aspects of the related literature at home and abroad are summarized. The second chapter introduces the meaning of RMB internationalization, and then analyzes the present situation of RMB internationalization, prospects and challenges. The third chapter mainly from the theoretical analysis of the fluctuation of RMB exchange rate, capital account liberalization and financial deepening degree of price mechanism. The fourth chapter through the establishment of VAR model empirically analyses the impact of each variable on the price, and the empirical results show that the persistent price level is mainly affected by their own expectations. RMB exchange rate price transmission mechanism exists in China, which the exchange rate and price changes into reverse, and there is a certain lag. Capital account liberalization and financial deepening degree of improvement will have a positive impact on prices, but there is far less affected by a higher level of financial deepening on prices, indicating that China’s low level of financial deepening. The fifth chapter according to the empirical analysis and conclusion, and accordingly put forward four policy implications.