How does China m-CBDC Bridge Project Promote the Internationalization of RMB? Empirical experiences from other Major Currencies

The People's Bank of China's participation in the m-CBDC Bridge Project is regarded as a step for China to further promote the internationalization of RMB. This paper will verify whether the project can promote the internationalization of RMB through theoretical analysis and empirical analysis methods. Firstly, this paper uses existing theories and conclusions to analyze the economic response brought by the project, and concludes that the project will bring three major effects: network externality, currency stability and financial market development. Then, the quarterly data of four countries and regions from 2002 to 2023 in the United States, Europe and Japan are selected to verify whether the three effects brought by the project can promote currency internationalization by using the method of panel regression. The empirical results show that network externalities, currency value stability and the degree of financial market development are important factors to improve the degree of currency internationalization. Therefore, this paper believes that m-CBDC Bridge Project is expected to further improve the degree of RMB internationalization. China should seize the opportunity and take this project as a fulcrum to accelerate the construction of a macro-control system compatible with the circulation of the central bank's digital currency, and fully explore the value brought by the central bank's digital currency to the financial market. Keywords: M-CBDC Bridge Project, Internationalization of RMB, Panel regression.