Research On The Mechanism Of E-CNY Enabling RMB Internationalization

The internationalization of RMB is manifested in the fact that RMB plays its functions of valuation,settlement and storage internationally,and achieves a state of large-scale and efficient cross-border circulation.However,more than 70% of the main export commodities are denominated in US dollars,while the RMB has not had a place,and the proportion of international payments and foreign exchange reserves representing the status of international settlement is only about 2%,and the proportion of global cross-border trade volume is less than 3%,both of which are far from the US dollar and the euro,which shows that the internationalization level of the RMB is still low and does not match China’s economic strength;At the same time,the "hegemonism" of the US dollar and its "inertia" role in the international monetary system have caused the internationalization of the RMB to encounter a bottleneck period.In the current digital era,the e-CNY developed by China’s central bank combines the advantages of traditional banknotes and private cryptocurrencies,and has the advantages of first mover and platform,which is expected to become a new driving force for the internationalization of RMB.Since the application of digital currency in cross-border payment is still in the pilot stage,the impact of the e-CNY on RMB internationalization is difficult to directly use data for empirical analysis,so this paper indirectly examines the constraints of the e-CNY internationalization,in order to find a way for the e-CNY to empower RMB internationalization from these factors.The research process of this paper is as follows: Firstly,the internationalization status of RMB is analyzed from the perspectives of RMB’s international settlement status,international valuation status,international investment status and foreign exchange reserve share,etc.Based on this,it is proposed that the current constraints of RMB’s internationalization are manifested in the aspects of US dollar hegemony,network externality,currency stability,financial market development degree and cross-border payment system.Then,starting from the connotation and operation mechanism of the e-CNY,it analyzes its advantages in the current “new currency competition”.Secondly,starting from the three functions of currency,relevant data of five world currencies from 2013 to 2021 including USD,EUR,GBP,JPY and CNY are selected,and the index of currency internationalization is constructed by the principal component analysis method,so as to establish the panel data model of influencing factors of currency internationalization.Regression methods such as fixed effect estimation,generalized least squares estimation and generalized matrix were used to analyze the factors affecting currency internationalization.Then the data were divided into two groups for heterogeneity analysis according to the degree of currency internationalization of each country,and the constraints of RMB internationalization were deeply explored.The research results showed that,Weak network externality,lack of currency stability and relatively lagging financial market are important factors hindering the internationalization of RMB.The issuance and circulation mechanism of the e-CNY and its advantages can alleviate the above problems and bring positive enabling force to break through the bottleneck of RMB internationalization.In the future,China should promote the development of the e-CNY from three aspects: expanding the functions and application scenarios of the e-CNY,exploring the new path of cross-border payment of the e-CNY,and actively improving the relevant legal system and regulatory system,so as to inject fresh “blood”into the internationalization of RMB.