Digital RMB, RMB Internationalization and Sustainable Development of the International Monetary System

The sound and sustainable development of the international monetary system is the cornerstone of the sound and stable development of the global economy. This paper takes digital currency in China as its research object and utilizes a regime-switching transition auto-regression (STAR) model and nonlinear time-varying parameter-stochastic volatility-vector auto regression (TVP-SV-VAR) model to empirically analyze the relationship between digital RMB, RMB internationalization, and the development of the international monetary system. The results show that the relationship between DC/EP and the internationalization of the RMB is time-varying, with the above relationship being significantly different in various economic situations. DC/EP can boost the internationalization of the RMB, and thereby contribute to the diversification of the international monetary system. The results have important policy implications for the sound and sustainable development of economic and financial markets.