Using an innovative network approach, this study constructs new indices of Renminbi (RMB) internationalisation and presents strong evidence of RMB’s growing influence globally and regionally. We identify networks of exchange rate spillovers and examine time-varying spillover intensities among RMB and world major currencies of G20 members as well as currencies related to the Belt and Road Initiative (BRI). Shocks from RMB generate intensifying spillovers across currency networks. The role of RMB in the networks has increased steadily over time. Our findings highlight that RMB has become increasingly important since China has initiated the marketisation reform of its currency and proposed to build the modern Belt and Road.

RMB; spillover; financial network; the Belt and Road Initiative

Yinggang Zhou, Senior Research Fellow of IMI, Renmin University of China; Center for Macroeconomic Research and Department of Finance at School of Economics, and Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, China.

Xin Cheng, Institute of Chinese Financial Studies, Southwestern University of Finance and Economics, Chengdu, China.

Yiming Wang, Department of Public Finance, and Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, China.