Submission Date


Document Type



Business & Economics


Scott Deacle

Committee Member

Johannes Karreth

Committee Member

Rudolph Henkel

Department Chair

Scott Deacle

Project Description

Currency internationalization could be considered as one of the primary facets of globalization in the modern world. Today, the US dollar accounts for nearly eighty-five percent of all global transactions, both in trade and finance. However, as China’s power has risen in the past few decades, many have pondered whether the Chinese currency, the RenMinBi (RMB), can internationalize. This study examines the literature on what components create an international currency. Then, we examine the characteristics of China’s financial markets and international relations to become familiar with the scholarly discourse surrounding China’s financial markets, international influence, and monetary stability. We then collect panel data from various sources including the World Bank, Heritage Foundation, and IMF from 2008 to 2018 to determine whether the RMB can internationalize. Using this data, we compose a few separate models based on whether a country has a Bilateral Swap Agreement (BSA) with China or if it has an RMB Clearing Center – which we consider to be symbols of increasing RMB internationalization. We hypothesize that China may be more likely to target higher-risk countries (i.e. more volatility, less stability) as stepping stones towards global usage of the RMB. The results of our study display One Belt One Road Membership to be the most impactful variable within our equation, followed by China’s business freedom index and trade with China divided by a certain country’s GDP. Using these findings, we offer the use of political analysis along with economic factors in the study of the currency internationalization as well as describe the limitations our study struggled with. It is hoped that this study can offer insight for currency analysts and the common investor as to how to investigate currency internationalization and the importance of including political insights in models of currency internationalization.