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China's RMB bilateral swap agreements: What explains the choice of countries?

Alicia Garcia-Herrero and Le Xia
Authors registered in the RePEc Author Service: Alicia Garcia Herrero ()

No 12/2013, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: This paper analyzes empirically what determines the choice of countries signing an RMB-denominated Bilateral Swap Agreement (BSA) with China. The gravity motif is predominant (both in terms of country size and distance from China) but so is the trade motif, in terms of both exports to China and the existence of an FTA with China. Institutional soundness also matters since countries with better government and less corruption are more likely to sign an RMB-denominated BSA. This contravenes the view that China has used RMB BSAs as a soft power tool in more corrupted countries. However, the fact that China has a preference for countries with a default history and a closed capital account calls for caution. Keywords: RMB internationalization, bilateral swap agreements. JEL: F33, F36, F42

JEL-codes: F33 F36 F42 (search for similar items in EconPapers)
Date: 2013-06-04
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Published in Published in Asia-Pacific Journal of Accounting & Economics, Volume 22, Issue 4, 2015 p. 368-383 as RMB Bilateral Swap Agreements: how China chooses its partners?

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