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KEYWORDS
RMB cross-border settlement,
Restrictive factors,
Countermeasures and suggestions
ABSTRACT
The active promotion on RMB cross-border settlement is an important way for the internationalization of RMB. RMB cross-border settlement facilitates the smooth development of interbank international settlement business, the financial services supply for international trade and investment, the realization of free RMB convertibility, the internationalization of RMB, the management of foreign exchange, and the regulation of national monetary policy. However, restricted by some factors, such as the low position of China in international labor division, the strong substitutability of export product, the original currency usage habit, and the imperfect RMB cross-border settlement financial system, China's banks and enterprises face risks and challenges in RMB cross-border settlement.
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1 Introduction
In 1990s, China began to use RMB settlement in its border trades with some of its neighbors. So far, it has signed agreements on border trade RMB settlement with the central banks of Vietnam, Mongolia, Laos, Nepal, Russia, Kyrgyzstan, North Korea etc. These agreements provide certain experiences for RMB cross-border settlement. However, China's foreign trade settlement mainly uses major international currencies (i.e. dollar.) for a long time. With the economic development of China's economy, the proportion of Chinese trade increases constantly in global trade and RMB is internationalized gradually. In 2008, the outbreak of the international financial crisis deepens China's recognition on the defects of current international monetary system. It is realized that, to get rid of all kinds of adverse conditions, China must fully participate in international competition and actively promote RMB internationalization. Thereafter, People's Bank of China signed currency swap agreements with the governments of South Korea, Malaysia, Belarus, Indonesia, and Argentina in succession. In July 2009, the State Council of China formally carried out cross-border trade RMB settlement pilots in Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan etc. to further promote RMB internationalization. However, the overseas regions of these pilots were mainly Hong Kong, Macao and the ASEAN countries. In August 2011, five ministries of China, including Central bank etc., made an announcement that the domestic region of cross-border trade RMB settlement would be expanded nationwide. The Central bank enlarged the scope and variety of cross-border RMB business based on a specification. Moreover, it actively enlarged the cross-border...