Abstract This paper aims to investigate the presence of currency substitution in Hong Kong, Macau and Taiwan for the period 2001 to 2013, based on the currency demand theory, using RMB as anchor currencies by constructing the Cointegration Equations of real money demand. This paper finds the presence of currency substitution in Hong Kong and Macau, but not in Taiwan because the real money demand functions are stable in Hong Kong and Macau, but not in Taiwan. Based on the findings, this paper finally put forward relevant policy recommendations in 4 aspects, constructing the Greater China Currency Area, constructing the exchange rate coordination mechanism and the risk pre-warning and the crisis rescue mechanism, and promoting the currency substitution process of RMB in Hong Kong, Macau and Taiwan.
DAN Jian-Xun,JIN Zheng. The Empirical Research of Currency Substitution in Hong Kong, Macau and Taiwan Based on the Real Money Demand Function. Economic Survey, 2016, 33(4): 0139.
2016, Vol. 33 
