Renminbi Internationalization and Stability of the International Monetary System

This paper investigates the stability of the international monetary system using the new open economic analysis framework.Our research has discovered that conditions for the stability of the international monetary system are such that the economic volume of reserve currency countries must be large enough and that the solvency capacity growth rate of reserve currency countries should be no lower than the real output growth rate of nonreserve currency countries and the real return of the reserve currency;the existence of the valuation effect cannot secure the stability of a reserve currency;and inclusion of the euro and the Japanese yen into international reserve currencies cannot stabilize the international monetary system,while Renminbi internationalization plays an irreplaceable role to the stability of the international monetary system.