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

The construction of RMB offshore market is certainly a step ahead under the framework of the internationalization of RMB,the central government tried to seize the opportunity of currency swaps with other countries for cross-border RMB trade settlement to seek a breakthrough and gradual development.Singapore began to carry out the RMB non-deliverable forward(NDF)business,followed by Hong Kong,and now,the RMB offshore center in the global has flowed,Hong Kong has become the largest RMB offshore market.Moreover,Hong Kong,as a window of Chinese foreign trade and investment,ties the mainland’s economic very closely,a large amount of offshore RMB flow into China from Hong Kong eventually through a variety of channels.Hong Kong,as an international financial center,has a mature capital market and economic system,is pursuing a free market economy,which determines the price;however,because the socialist system of market economy is still in the construction process and "one country two systems" is such a special system,resulting in big differences between Hong Kong and mainland Chinese RMB price.At present,RMB interest rate market and the exchange rate reform is further promoted,it is impossible to be successful in the short term,the difference in the price of onshore and offshore RMB is bound to exist for a long time.In the process to promote the internationalization of the RMB,with the gradual liberalization of the capital account,the implementation effect on domestic monetary policy caused by abnormal international capital flows such as arbitrage and foreign exchange arbitrage can not be ignored.Therefore,paying attention to the development of the Hong Kong RMB offshore market and analyzing its influence on domestic monetary policy is very important.On the one hand,it can provide a reference for the monetary policy for the central bank,who can consider the influence of the RMB offshore market when making monetary policy,ensuring that the implementation of monetary policy can achieve the desired effect,on the other hand,we can also find some issues in the development of Hong Kong RMB offshore market and some feasible suggestions for its healthy development.From the development process and the state of Hong Kong RMB offshore market,this paper sums up the general situation of Hong Kong RMB offshore market development,firstly,it analysis the impact of Hong Kong RMB offshore market on domestic monetary policy from the aspect of theory,then use econometric methods to do empirical analysis to argue the impact from several aspects of influence.The study found that the impact of Hong Kong RMB offshore market development on domestic monetary policy is relatively small and still in thecontrollable range on the whole at present,but with the internationalization of the RMB promoting and Hong Kong RMB offshore market continuing to develop,its impact on domestic monetary policy will be continuously increased,it is necessary to continue to focus on Hong Kong RMB offshore market development and its impacts.In order to cope with the possible adverse effects of these impacts,this paper puts forward the following suggestions:to promote the development of Hong Kong RMB offshore market,to improve the RMB offshore market supervision mechanism,to accelerate the reform of RMB interest rate market,to accelerate the reform of RMB exchange rate market,to promote the open of capital account steadily.