Researches On The Influence Of Foreign Direct Investment On The Internationalization Of Currency Of Home Country

As an important part of China's economic growth,China's outward foreign direct investment(OFDI)flows has risen continuously for 10 years since 2005 and ranks second in the world.With our economy rising from pre-peak growth to structure optimize and steady growth,and a series of favorable policies have been introduced such as the opening of Shanghai-Hong Kong Stock Connect,Shenzhen-Hong Kong Stock Connect,the RMB joined SDR,the economic and social environment of RMB internationalization gradually mature.As a result,RMB internationalization and OFDI have become the research hotspot,but there are few studies on the interaction between the both,and it has not yet formed a complete theoretical mechanism.In this context,drawing on the successful experiences of other countries,the inclusion of OFDI in the factors that affect the degree of internationalization of the currency and the study of the promotion that OFDI to RMB internationalization has important reality significance for the rapid promotion of the international status of the RMB.Based on the theory of internationalization of currency and OFDI,this paper examines the development process of OFDI and internationalization of currency in relevant countries,and analyzes the influence of OFDI on the internationalization of foreign currency from the perspective of monetary function.In order to further verify the scientific nature of the mechanism,The article takes the relevant data of seven countries as a sample,use the scale of OFDI as the core explanatory variable,the national economy scale,currency stability,scale of trade,development of financial market as a control variable,to build a panel model for empirical analysis.The empirical results show that when the scale of OFDI increased by one percentage point each,the use of currency in international bonds and official foreign exchange reserves will increase by 0.688 and 0.642,that is,OFDI has a significant role in promoting the degree of the internationalization of the pricing functions and the reserve functions Apart from this,the degree of the financial market's development and the currency's stability also affect the currency internationalization.Finally,combined with the theoretical analysis,the results of empirical research and the reality of our country,put forward policy recommendations to promote the RMB internationalization.