Spillover Effect And Risk Analysis Of Cross-border Use Of RMB

As trade and investment between China's mainland and Hong Kong SAR -Macao SAR as well as ASEAN countries is increasing,the status of RMB in the world monetary system is higher and higher.Since the operation of RMB cross-border pilots in 2009,the scope and scale has been gradually expanding.The establishment of Shanghai FTA innovates free trade account,accelerates the process of RMB internationalization greatly and promotes trade and investment-financing facilitation.Therefore,the research that the cross-border use of RMB can affect the trade and investment-financing is being deepened constantly.Based on this,this article firstly carries on policy analysis by building the policy framework of the cross-border use of RMB regarding cross-border trade and investment-financing,combing policies and financial innovation cases published by Shanghai FTA,and comparing the policies and origin of force among the four FTA.Next,it researches the status of the cross-border use of RMB between China and Shanghai FTA by using cross-border trade settlement amount of RMB,capital flows,foreign direct investment and overseas financing amount since 2009,besides by comparing the scale of the four FTA.After completing the analysis of policy framework and the status,this paper respectively constructs the theoretical framework for the cross-border use of RMB spillover effects of the trade and investment-financing through the theory analysis of Sun Jie(2014),He Ping and Zhong Hong(2014).And further based on the financial innovation cases,we study the trade effects of the cross-border use of RMB from the different angles including reducing transaction costs of import and export enterprises,improving trade efficiency and transforming the mode of trade through case analysis and study investment-financing effects form reducing cost of investment-financing,investment-financing facilitation and diversification of subject and channels of investment-financing over case analysis.Then draw the conclusion that the cross-border use of RMB contributes the scale and facilitation of trade and investment-financing.But the benefits and risks are concurrent,so this paper further studies the risks of the cross-border use of RMB from macro and micro perspective.On the macro level,it analyses the risks from exchange rate fluctuation and arbitrage.On the micro level,it analyses the risks from corporation and commercial banks.Finally,based on the overflow effects and risk analysis,this article poses policy recommendations of promoting the internationalization of the RMB From how to maximize the spillover effects and how to guard against the risk.