A Legal Analysis on the Construction of Chinese Monetary Union in Four-Regions of China across the Straits

Abstract

As a united country, there are four currencies in China, including Mainland, Hong Kong, Macao and Taiwan (hereinafter referred to as “the Four Regions”). The realization on the construction of Chinese Monetary Union in the Four Regions is a crucial step to realize the strategy of the RMB internationalization, and it will make great progress in the promotion of China’s economy. The similarity in economic structure and the high dependence on trade make it feasible to construct a Chinese Monetary Union among the Four Regions, however, challenges from legal, political and economic problems still exist. The theory of optimum currency area and the experience and practice of European Currency Union will provide a proper basic theory and the best model to construct the Chinese Monetary Union. While Chinese Monetary Union cannot be realized overnight, it requires a gradual promotion by stages as well as a thorough legal supervision by providing guarantees. From the respect of strategic planning, monetary integration between Hong Kong and Macao would be the first step, then turn to realize the integration between Hong Kong, Macao and Mainland China, monetary integration within the four regions shall be realized at the last stage. In addition, from the perspective of constructing an effective economic and legal system, it is necessary to simultaneously promote the construction of unified institutions, develop the offshore RMB market, construct the RMB fund, exchange rate evaluation system and other economic systems, as well as the construction of relevant legal systems, so as to guarantee the effectively operation of the Chinese Monetary Union.