Factors Impacting the Internationalization of the RMB in Asian Markets：An Analysis of the Settlement of Border Trade and Currency Conversion

　　Abstract: To consider the conditions for realizing the internationalization of the RMB, this article analyzes the bilateral currency swap agreements that China has signed with several Asian countries and cases of the use of the RMB as a settlement currency in border trade. Empirical evidence indicates that the main factors affecting the internationalization of the RMB include: the volume of bilateral trade, the level of the country’s foreign debt, absolute GDP per capita, and the physical distance between the countries. Of these factors, foreign states become more likely to hold RMB as the amount of bilateral trade increases and as national debt increases; the likelihood that the RMB will become a circulating currency in another country becomes greater as the country gets closer to China or as the country’s GDP per capita gets lower.

　　Author: Zhong Yang is a PhD Student in the School of Economics at Jilin University