Factors affecting cross-border RMB settlement under the Belt and Road Initiative: An empirical study based on panel data of 19 countries (regions)

Based on the panel data of 19 countries (regions) under the background of the Belt and Road Initiative (BRI) from 2014 to 2018, this study uses generalized least squares (GLS) models, which reduce the heteroscedasticity to explore the factors affecting partner countries' RMB settlement choice. Further, this study compares the differences of influencing factors between BRI and non-BRI countries (regions). The results show that for countries (regions) along the Belt and Road, China's economic and financial development more effectively promote the use of RMB settlement. In addition, the trade characteristics are closely related to the cross-border RMB receipts and payments. In terms of trade volume, the larger the bilateral trade between China and BRI countries (regions), the larger the cross-border RMB receipts and payments will be. In terms of trade structure, due to low degree of substitution for high-tech products, the higher the proportion of China's high-tech products exported to foreign countries (regions), the greater bargaining power in the choice of pricing and settlement currency. Moreover, bilateral currency swap agreements, the establishment of RMB clearing centers, and currency stability are also critical influencing factors.