Research On The Benefit And Cost Of Currency Internationalization And Financial Sanction

Recent years,Currency Internationalization has been unanimously considered as an important part of national competition strategy by major countries in the world.The Fifth Plenary Session of the 19th Communist Party of China Central Committee also proposed:steadily and prudently promote the internationalization of the RMB.Under the historical trend that RMB is about to become an international currency,Currency Internationalization has become a hotspot in the field of international finance research.Among the four research directions,Currency Internationalization Benefit and Cost Analysis cannot be circumvented by theoretical and policy researcher,and contribute much in policy-making of RMB Intenationalization as an important reference.However,while there is relatively rich theoretical literature on the types of benefits and costs of currency internationalization,the empirical literature has been thin,thusly cannot provide directly data and experience support for RMB Internationalization policy-making process.In addition,scholars hold diverse opinions on the order of accomplish domestic financial reforms and prmoting RMB Internationalization process,which in turn triggered a debate on the priority of the RMB Internationalization policy.In response to the above problems,it is necessary to carry out an analysis on the benefits and costs of currency internationalization from the perspective of empirical analysis.Based on the perspective of the cross-border payment system,we start the analysis of the benefits and costs on Currency Internationalization by taking the service interruptions of CHIPS and SWIFT as policy shocks,using panel data from 40 emerging market countries from 1996s to 2019s,and conducting empirical research through synthetic control methods.Through measurng the economic cost of not promoting Currency Internationalization,this article revel the threat to economic security.The results show that the potential economic cost of a particular country not promoting currency internationalization including:per capita GDP is reduced by an average of 19%compared to the potential level;GDP growth rate is reduced by an average of 4.77 percentage points from the potential level;the overall national welfare level and its growth momentum are immediately significant Deterioration;the economic growth trend is completely reversed,and the economy is trapped in sustained economic recession.By demonstrating that the promotion of Currency Internationalization can benefit in reducing or even eliminating the above economic cost,we in turn verifies the benefit of Currency Internationalization on economic security.After the effectiveness analysis such as placebo test and ranking test,the relevant results are proven stable.The possible theoretical contributions of the research embodied in:First,it enriches the research in the field of Currency Internationalization Benefit and Cost Analysis,especially in the field of empirical analysis;second,it provide some empirical evidence to the academic debate on the priority of RMB Internationalization policy.In terms of practical contibutions:First,it provides certain data and experience support for the policy-maker of RMB Internationalization;second,it helps to understand one of the true goals of the RMB Internationalization—maintaining national economic security.