Empirical Analysis on the Circulation of Renminbi in Hong Kong Affecting Mainland Money Demand

With the further development of economic relationship between Mainland and Hong Kong, and the operation of personal RMB business of bank in Hong Kong, the scale of RMB circulating in Hong Kong is more and more large. How does this status affect mainland money demand? This paper empirically analyzes it using VAR model and impulse response, and the test results evidence that the circulation of Renminbi in Hong Kong does have a significant effect on mainland money demand. The corresponding countermeasures are put forward in the end based on the theoretical and empirical analyses.