Research On The Spillover Effect Of Monetary Policy In The Process Of RMB Internationalization

In 2010,China became the world’s second largest economy,and in 2013 China replaced the United States as the world’s largest trading nation,China’s rising economic has expanded the influence of the renminbi and China’s monetary policy.But the growing size of China’s foreign economy also highlights China’s economic security,which is seriously constrained by the non internationalization of its currency 。 Therefore,the Chinese government is determined to adjust its policy and make efforts to push the renminbi out of the national boundaries and become an international currency.The outbreak of the global financial crisis in 2008 exposed the disadvantages of the current international financial system that centered on the dollar,Chinese government has taken this as an opportunity and speed up the internationalization of the RMB.The size of the economy and trade has enabled the renminbi to be internationalized,but underdeveloped domestic financial market,capital account control and,interest rate and exchange rate management are the main obstacles to internationalization of RMB.Therefore,in line with the internationalization of the RMB strategy,China has carried out a number of domestic economic and financial reform,these reforms have created a favorable domestic economic environment for RMB internationalization and made China’s monetary policy more prone to spillover effect.In the study of the international transmission and spillover effects of monetary policy,most of the research objects focused on the spillover effects of advanced economies,especially the US monetary policy,few papers study the spillover effects of monetary policy in emerging and developing countries such as China.This paper starts from an innovative point of view and uses empirical model to analyze the impact of China’s monetary policy on the neighboring countries’ economy under the background of RMB internationalization.The process of RMB internationalization is still in a "Regionalization" stage,and the spillover effect of China’s monetary policy is more concentrated in the region of Asia.The ASEAN occupy the transport hub of the Pacific Ocean and the India ocean,have an important strategic position for China.Therefore,this paper selects the five largest economies in the ASEAN as the sample countries of China’s monetary policy spillover effects.China’s monetary policy variables include money supply,interest rate and exchange rate.The economic variables of the five ASEAN countries include GDP,CPI,interest rate,exchange rate,exports to China and the stock market index.The paper establishs panelVAR model to analyze the spillover effects of China’s monetary policy by using monthly data from 2009 to 2016.The results show that China’s monetary policy have spillover effects on the the five ASEAN countries whether in the short or long term,expansionary monetary policy has an obvious positive spillover effect on the GDP of the five ASEAN countries and exports to China.Interest rate,exchange rate,trade output and capital market spillover channels are unimpeded,and China’s monetary policy will have spillover effects on related economic variables.The spillover effect of price type monetary policy represented by interest rate and exchange rate is stronger than the spillover effect of quantitative monetary policy.Except for the stock market,China’s monetary policy has less influence factor on the economic variables of the five ASEAN countries in the long term,RMB internationalization time is short,so it is weaker than the international currency such as as dollar.Finally,the paper puts forward some policy suggestions,the main point is choosing reasonable monetary policy to reduce the negative spillover effect,participating in regional financial cooperation to expand the regional influence of RMB,perfecting interest rate and exchange rate reform to improve the effectiveness of monetary policy and continuing to push forward the internationalization strategy of RMB by using the Belt and Road.