Unpacking the global financial networks based on an emerging international currency: a case study of RMB-denominated Panda Bonds

This paper draws attention to currency segmentation within global financial networks (GFNs) and presents an analysis of the GFNs shaped by the issuance of Panda Bonds, an RMB-denominated cross-border debt instrument. While existing GFN studies have primarily focused on USD-denominated cross-border financial transactions, this study maps the RMB-denominated GFNs and examines the key drivers that have shaped the structure of the GFNs. The findings show that the Chinese government has fostered but also constrained the Panda bond market through regulatory design, selective market opening, and the differentiated positioning of key financial centers. This regulatory framework also shapes the configuration of FABS firms, with Chinese state-owned banks occupying central positions, which further helps to expand the issuers of the new bond market. Bond issuers nevertheless are highly unevenly distributed across countries, while the geoeconomic factors reflected by trade and investment ties with China, and geopolitical factors, are found to be important for this spatial pattern. By foregrounding the currencies used in cross-border financial transactions, the study develops a new analytical lens for GFN research and sheds light on the geographical pattern and the evolution of the GFN based on an emerging international currency.