Bilateral swap agreement and Renminbi settlement in cross-border trade
Song, Ke; Xia, Le (20.09.2019)
Numero
19/2019Julkaisija
Bank of Finland
2019
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201909241495Tiivistelmä
This research empirically examines the impact of China’s Renminbi (RMB) bilateral swap agree-ments (BSAs) on the usage of the currency in cross-border trade transactions. By using a unique dataset from SWIFT including cross-border settlement messages of 91 countries/regions between October 2010 and November 2015, we confirm that the signing of a RMB BSA helps to increase the number, the value and the proportion of RMB settlement in cross-border trade. Our results are robust with respect to the choice of different models, including multi-level mixed model, two-stage regression model, and difference-in-difference model. In addition to justifying the effectiveness of China’s BSA-signing strategy to promote the RMB usage in trade settlement, our results clarify that the signing of those RMB BSAs is not purely for China’s political ends as some scholars claim.
Sisällysluettelo
Abstract ..4
1 Introduction ..5
2. Background and data ..7
The RMB internationalization and PBoC’s BSA signing ..7
SWIFT Data ..10
3 Empirical results ..11
Performance with and without a BSA ..11
OLS results ..12
Multi-level mixed model ..14
Endogeneity of BSA signing ..15
Non-stationarity of variables ..18
Difference-in-Difference Model ..19
IV regression results ..20
Size of the Swapline ..22
4 Conclusions ..23
Reference ..24
Appendix 1 China’s bilateral local currency swap agreements, as of end-2017 ..25
Appendix 2 Variable definitions and sources ..27
1 Introduction ..5
2. Background and data ..7
The RMB internationalization and PBoC’s BSA signing ..7
SWIFT Data ..10
3 Empirical results ..11
Performance with and without a BSA ..11
OLS results ..12
Multi-level mixed model ..14
Endogeneity of BSA signing ..15
Non-stationarity of variables ..18
Difference-in-Difference Model ..19
IV regression results ..20
Size of the Swapline ..22
4 Conclusions ..23
Reference ..24
Appendix 1 China’s bilateral local currency swap agreements, as of end-2017 ..25
Appendix 2 Variable definitions and sources ..27
Julkaisuhuomautus
Published in Economic and Political Studies Volume 8, Issue 3, 2020, Pages 355–373 https://doi.org/10.1080/20954816.2020.1780818