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China s RMB Bilateral Swap Agreements: What explains the choice of countries?

Author

Listed:
  • Alicia Garcia-Herrero
  • Le Xia

Abstract

This paper analyzes empirically the determinants behind the choice of countries signing an RMB-denominated Bilateral Swap Agreement (BSA) with China. The gravity motif is predominant (both in terms of country s size and distance from China) but also the trade one, both in terms of exports into China as well as sharing an FTA with China. Institutional soundness also matters since countries which better government and less corruption are more likely to sign an RMB-denominated BSA. This goes against the view that China has used RMB BSAs as a soft power tool in more corrupted countries. However, the fact that China s has a preference for countries with default history and a closer capital account calls for caution.

Suggested Citation

  • Alicia Garcia-Herrero & Le Xia, 2013. "China s RMB Bilateral Swap Agreements: What explains the choice of countries?," Working Papers 1318, BBVA Bank, Economic Research Department.
  • Handle: RePEc:bbv:wpaper:1318
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    References listed on IDEAS

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    1. Dal Bianco, Marcos & Camacho, Maximo & Perez Quiros, Gabriel, 2012. "Short-run forecasting of the euro-dollar exchange rate with economic fundamentals," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 377-396.
    2. Mariana A. Toran & F. Javier Morales & Sara G. Castellanos, 2012. "Analysis of the Use of Financial Services by Companies in Mexico: What does the 2009 Economic Census tell us?," Working Papers 1216, BBVA Bank, Economic Research Department.
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    Cited by:

    1. Joshua Aizenman, 2015. "The Internationalization of the RMB, Capital Market Openness, and Financial Reforms in China," NBER Working Papers 20943, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Bilateral Swap Agreements; RMB Internationalization;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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