BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
China’s RMB bilateral swap agreements: What explains the choice of countries?
() and Le Xia
Abstract: This paper analyzes empirically what determines the choice
of countries signing an RMB-denominated Bilateral Swap Agreement (BSA) with
China. The gravity motif is predominant (both in terms of country size and
distance from China) but so is the trade motif, in terms of both exports to
China and the existence of an FTA with China. Institutional soundness also
matters since countries with better government and less corruption are more
likely to sign an RMB-denominated BSA. This contravenes the view that China
has used RMB BSAs as a soft power tool in more corrupted countries.
However, the fact that China has a preference for countries with a default
history and a closed capital account calls for caution.
Keywords: RMB internationalization; bilateral swap agreements; (follow links to similar papers)
JEL-Codes: F33; F36; F42; (follow links to similar papers)
22 pages, May 30, 2013
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