Research On The Influencing Factors Of RMB Liquidity Supply In Hong Kong Offshore Market

November 30,2015,the International Monetary Fund announced that the RMB would be subsumed into the SDR basket of currencies.After a year,the international status of the RMB has been improved.As a developing country,China has become an economic powerhouse,but the financial deepening is not enough,the capital project is not fully open,the RMB under capital cannot be freely convertible,in such a special environment,the development of offshore RMB market has become an important strategy to achieve the internationalization of RMB.Since 2009,China has promoted the RMB cross-border trade settlement pilot work vigorously.The RMB offshore markets in Hong Kong,Taiwan,Singapore and London have all developed rapidly.Among them,the offshore RMB market in Hong Kong,which is the experimental field,has developed rapidly and has become the largest offshore RMB center in the world.In order to improve the depth of offshore market to meet the demand of cross-border trade,cross-border investment,foreign exchange and other economic activities,it is necessary to ensure sufficient RMB liquidity.Based on the theory of liquidity supply theory,interest rate parity theory and expectation theory,this paper analyzes the supply of RMB liquidity in Hong Kong offshore market from the perspective of long-term liquidity supply and short-term liquidity supply.Using the SVAR model,with the Hong Kong offshore RMB deposit in April 2010 to April 2017 as sample data to test the factors that may affect the liquidity of RMB in Hong Kong's offshore market.The result shows that RMB cross-border settlement has a significant positive impact on the supply of RMB liquidity in the offshore market,which conforms to promote RMB internationalization strategy purpose;the difference in interest rates between onshore and offshore markets has a short negative effect in the initial stage,and then the positive effect gradually stabilizing;the RMB exchange rate expectation has a negative effect on the supply of RMB liquidity in the offshore market,which becomes more and more obvious when the depreciation expectations of RMB exchange rate are stronger.Therefore,in the process of RMB internationalization,our country should continue to improve the cross-border trade RMB settlement,focus on the potential impact of expected exchange rate fluctuations,and strengthen the liquidity management of the RMB.