Influencing Factors Of RMB Cross-border Settlement

On Oct.1st 2016,RMB has joined currency basket of International Monetary Fund(IMF)Special Drawing Rights(SDR)officially.This event with milestone significance is a key step for RMB internationalization process.However,there is no doubt that RMB cross-border settlement is a means and necessary channel for RMB walking toward international stage.The development of RMB cross-border settlement builds up foundation for realizing RMB internationalization process.The development of RMB cross-border settlement keeps rapid increasing trend in recent years.Only in 2014 and before Aug.2015,there are 12 newly established RMB clearing centers in the world.According to the SWIFT data in Aug.2015,there are already 1134 financial institutions in the world using RMB for international settlement in China and Hong Kong.In addition,the ratio of RMB in total international trade settlement has been risen from No.12 th in 2012 to No.4th in Aug.2015,which has exceeded Yen and accounts for 2.79%.In the three years from 2012 to 2015,RMB has exceeded seven currencies continuously and become one of the five settlement currencies in the world.However,according to the data of Bank of China,the Chinese foreign trade settled in RMB has increased from 0% in 2010 to 26% in 2015,but it has creased to 16% in the following.The RMB payment in the first nine months in 2016 has decreased by 16%,which reflects the decrease of RMB in trade and cross-border investment.The expansion of RMB cross-border settlement has been slowed down.The short-term resistance of RMB internationalization is the rational choice of market subject,but the motivation for long-term development still exists.Therefore,it is very necessary to study the related factors affecting RMB cross-border settlement scale.This paper mainly discusses in five chapters.The first chapter is introduction,which mainly introduces background and significance of this research,literature review both at home and abroad,mainly including foreign researches on currency internationalization,related literature for the selection of international settlement currency as well as related researches of domestic scholars on RMB cross-border settlement and RMB internationalization issue and the research content and frame.It points out the innovations and shortages of this paper in the end.The second chapter elaborates concept and related theoretical basis of RMB cross-border settlement and mainly introduces currency competition theory and settlement currency selection theory.The third chapter mainly elaborates formation and development of our cross-border trade RMB settlement,its current situation,problems as well as the influence of RMB cross-border settlement implementation on every aspect of our economic development.The fourth chapter makes quantitative analysis of influencing factors of RMB cross-border settlement amount from empirical perspective and with adoption of VAR model and impulse response.The fifth chapter is conclusion and related policy suggestions.It summarizes conclusions of above theoretical and empirical analysis and proposes corresponding policy suggestions for further promoting RMB cross-border settlement.Following conclusions have been drawn based on above discussions and empirical research:First,our cross-border trade RMB settlement amount will be affected by import and export volume of manufactured goods,RMB exchange rate against U.U.dollar,consumer price index and offshore RMB market.Secondly,Reasonable policies have been proposed for the researches on related influencing factors of our cross-border trade RMB settlement and by combining the practical situation.It is suggested to promote economic development,improve economic and trade development level,improve formation mechanism of RMB exchange rate and change unbalanced payment structure.