Research On The Risk Conduction Effect Of RMB Market Between The Onshore And Offshore

The onshore market of RMB is mature and massive,the setting of relevant prices is subject to a stronger degree of intervention by central bank policies;while the offshore market is later and smaller in size,with a higher degree of liberalization,can intuitively reflect the real supply and demand for RMB in the market.China needs to continuously improve the level of RMB internationalization and enhance the international status and influence of RMB.In recent years,along with the severance of the international settlement system from Russia,more economies have turned to the RMB trade settlement system,shaping a whole new relationship between the onshore and offshore RMB markets.At the same time,the acceleration of interest rate and exchange rate market reforms has also led to more frequent interactions between the RMB and the onshore market and a significant increase in risk transmission.Based on this background,in order to identify and manage the risk conduction effects of the off-shore market in the process of RMB internationalization,this paper comprehensively discusses the possible risk conduction effects of the two markets in the process of RMB internationalization from the perspective of off-shore RMB price fluctuations,clarifies the price fluctuations and mutual influence effects between the two markets in the process of RMB internationalization development,identifies the possible risks between them and makes The paper also identifies the possible risks between the two markets and makes recommendations.First,this paper briefly introduces the issues related to the internationalization of RMB,the RMB exchange rate determination mechanism and the interactions between the RMB and the onshore market,and compares the literature from three aspects.Second,the research hypotheses are introduced by focusing on the interrelationship between offshore and onshore and the impact on the risk transmission effects of the two markets through the theories of the causes of exchange rate differential formation,cross-market arbitrage,the mechanism of market expectations and exchange rate volatility.Again,based on interest rate and exchange rate indicators,the VAR model and BEKK-MVGARCH model are used to empirically analyze the volatility and risk transmission of RMB off-shore market prices,proving the risk transmission effects of insignificant interest rate transmission,unidirectional spot exchange rate transmission and bidirectional forward exchange rate transmission in the RMB off-shore market.Finally,in response to the findings of the study,recommendations are made to steadily promote the onshore market reform,accelerate the transformation of the offshore market,strengthen the coordination of regulation and reform and be vigilant against external risks,which provide more targeted policy guidance for the regulatory development of China’s off-shore financial system.