The Research Of Factors Affecting The Internationalization Of Currency And Its Inspiration On RMB

Today the monetary system is still centered on the US dollar,so it is possibly that a financial crisis will affect the whole world in a short time.It is necessary for those countries which are over-reliant on US dollar foreign exchange reserves to improve their ability to resist financial risks.Therefore,promoting the internationalization of emerging currencies and renminbi is not only to improve the international status of renminbi and increase the settlement ratio of renminbi in international trades and financial transactions,but also to increase China's ability to prevent unknown financial risks.According to the three functions of the international currency,the article chooses the share of the foreign exchange market trading and other indicators to construct a new index which measures the internationalization of different currencies,and then conducts an empirical analysis to explore the effects of economic scale,the development of financial market,political and military strength,the stability of home currency and historical inertia on the internationalization of currencies.The result shows that the scale of economy has a great influence on the internationalization of home currency which is the basis for renminbi to be international.At the same time,historical inertia is also an important factor in determining the internationalization of currency.People tend to choose the international currency which is already used all over the world,and the development of the financial market is also closely related to the internationalization of the currency.A country must constantly control the stability of the currency to avoid affecting its internationalization due to the restriction of international trade.