The currency anchor is one of the important indicators for measuring the extent of a currency's internationalization, and its status is closely tied to the strength of the economy. With China's economic rise, whether and when the renminbi（RMB）can become a currency anchor in the East Asia or even on a global scale has attracted widespread attention. The existing literature provides a solid foundation for assessing the RMB currency anchor effect. The estimation of this effect and the analysis of its influencing factors are relatively comprehensive. However, the literature has inadequately addressed the evolving trend of the RMB's currency anchor effect, particularly its downward tendency, and few studies have analyzed it from the perspective of the exchange rate regime. The goal of this study is to measure the trend of the RMB currency anchor effect and explain its changes from the perspective of the exchange rate regime.
This paper utilizes daily nominal exchange rate data obtained from the CEIC database, designates the New Zealand dollar as the benchmark currency, and adheres to the two-step method developed by Kawai & Pontines（2016）, incorporating a state-space model. Additionally, it draws on to Zhang et al.（2023）by not imposing restrictions on the sum of model parameters. After estimating the parameters, normalization is conducted to obtain the currency anchor effect. Furthermore, the paper also uses monthly trade data from the CEIC database, exchange rate regime classification data from the IMF, and annual GDP data from the World Bank, among others. A fixed-effects model is also employed to analyze the factors contributing to the changes in the RMB currency anchor effect.
The conclusions of this paper are as follows. Firstly, the RMB has a certain degree of influence across all continents. Among the 65 currencies evaluated in this study, a total of 36 currencies in Asia, Europe, Africa, South America, North America, and Oceania significantly anchor to the RMB. Secondly, the RMB currency anchor effect is declining, and the exchange rate regime is the core reason. After the autonomous volatility of the RMB exchange rate increases, the RMB currency anchor effect of freely floating currencies remains stable, while that of non-freely floating currencies declines, resulting in an overall decline in the RMB currency anchor effect. Thirdly, the observed decline in the RMB's currency anchor effect should not be interpreted as a decline in the RMB currency anchor status. Although the numerical value of the RMB currency anchor effect has declined significantly since 2017, the overall response of currencies to RMB exchange rate fluctuations has remained consistent. Consequently, the RMB's actual currency anchor effect may lead to an underestimation of the RMB currency anchor status.
The marginal contributions of this paper are as follows. Firstly, it measures the time-varying nature of the RMB currency anchor effect and finds that it has shown a downward trend since 2017. Secondly, it analyzes the reasons for this decline in the RMB currency anchor effect from four aspects: exchange rate regime factors, trade factors, trade invoicing factors, and geopolitical factors, and finds that the exchange rate regime is the core factor. Thirdly, this paper is the first to directly study the impact of the exchange rate regime on the RMB currency anchor effect, finding that the exchange rate dynamics of the RMB and the exchange rate regimes of other currencies jointly affect the RMB's currency anchor effect.

Since the 1970s, with the relaxation of global financial regulations, the innovation of financial product, and the development of information technology, the process of financial globalization has advanced rapidly. Currently, the global financial system exhibits an increasingly complex“core-periphery”network structure, with the US as its center. Changes in the US monetary policy profoundly affect the macroeconomic performance of other countries. This paper systematically examines the impact of changes in the US monetary policy changes on the synchronization of economic cycles between other economies and the US, exploring the role played by each economy's position within the global financial network amid its growing complexity.
The study finds, firstly, an accommodative the US monetary policy reduces economic cycle synchronization between other economies and the US, while a tightening policy increases it. Secondly, using a “core-periphery”perspective of the global financial network, the paper further analyzes how an economy's position within the network influences its resilience to withstand the US monetary policy shocks. By constructing global bond and equity capital flow networks, the study identifies the US as the core of the global financial network, with its monetary policy exerting stronger spillover effects on peripheral economies. Additional findings suggest that enhancing financial development and governance can improve a country's ability to absorb such shocks. Maintaining monetary policy independence while advancing capital account liberalization can also help economies better cope with fluctuations in the US monetary policy.
The marginal contributions of this paper are twofold, firstly, in terms of perspective, it investigates the underlying factors affecting the synchronization of economic cycles between other economies and the US namely, the influence of the US monetary policy. Previous studies on business cycle transmission or spillovers from core countries mainly focused on trade or financial linkages, whereas this paper directly examines how the US monetary policy—central to global liquidity and economic flows—shapes international business cycle synchronization. Secondly, regarding transmission mechanisms, while earlier research emphasized bilateral trade and financial links, this study, set against the backdrop of an increasingly networked global financial system, highlights the significance of an economy's position within the global financial network. It finds that greater network centrality strengthens resilience to the US monetary shocks, thereby validating the“core-periphery”theory in international economics and enriching the literature on risk spillovers in global financial networks.
The findings illustrate how the US, as the core of the global financial network, leverages its structural financial power to externalize the costs of domestic economic recovery onto other economies through unconventional monetary policy. For China, its massive economic scale provides space for relatively independent operation from the US economic cycles and supports a more measured approach to financial liberalization. As a responsible major developing country, China should prioritize its own national conditions and prudently balance domestic and external macroeconomic conditions while advancing financial openness.

Cross-border macroprudential policies, as an important component of China's macro-prudential management framework, help to mitigate the impact of external shocks on the domestic economy. This paper studies the mitigating effect of cross-border macro-prudential policies on the impact of the US monetary policy from the perspective of dynamic financial asset price stability. Based on the term mismatch between macroprudential policy effects and the transmission of external shocks, this paper constructs the optimal cross-border macroprudential policy from the perspective of dynamic financial asset price stability, and simulates the impulse response results of the optimal cross-border macroprudential policy under different stances of the US monetary policy.
The results show that the implementation of tightening cross-border macroprudential policies can weaken the impact of the US monetary policy on financial asset prices in China, and reduce the comovement between global asset prices and China's asset prices. Tightening both types of capital outflow and capital inflow macroprudential policies can dampen asset price volatility. However, due to issues of term mismatch, capital outflow macroprudential policies are more effective than inflow policies. Under the US monetary policy tightening, while inflow macroprudential policies can attenuate the impact of the US monetary shock, they may amplify these shocks during specific periods because of the tightened budget constraint of domestic firms. Under the US monetary policy easing, inflow macroprudential policies prove to be ineffective in counteracting asset price increases driven by enhanced risk-taking behavior.
Dynamic optimal macroprudential policy analysis reveals that the optimal policy level varies across different time horizons when targeting financial asset price stability. These differences stem from the dynamic instability of cross-border macroprudential policies in mitigating the US monetary policy effects. In contrast, capital outflow macro-prudential policies exhibit greater stability, more effectively reducing financial asset price volatility regardless of policy scope changes or shifts in the US monetary policy stance.
There exist trade-offs between different objectives of cross-border macroprudential policies. The optimal policy targeting financial asset prices leads to greater declines in consumer prices. Conversely, when targeting consumer prices, the optimal policy results in more significant financial asset price drops. Achieving coordinated progress across multiple objectives requires further policy coordination between cross-border macro-prudential measures and other macroeconomic policies such as fiscal and monetary policies.
This study contributes to the literature in two ways. Firstly, this paper adopts an intertemporal adjustment standpoint to examine cross-border macroprudential policies, discussing the term structure alignment between policy impacts and financial asset price responses to the US monetary policy shocks, which addresses the limitations of static analysis. Secondly, based on the empirical relationship between China's asset prices and global financial cycles, this paper analyzes optimal macroprudential policies under specific policy objectives without relying on structural assumptions that may not hold in reality, providing a practical reference for refining the macroprudential policy framework.

In recent years, as instability in the global financial system has intensified, risk management issues among banks have become increasingly prominent. Small and medium-sized banks（SMBs）, in particular, are more vulnerable to market shocks, exposing weaknesses in capital adequacy, risk tolerance, and liquidity management. As a crucial financial safety net, the deposit insurance system was originally designed to protect depositors' funds, prevent bank runs, and maintain financial stability. However, how deposit insurance influences banks' risk-taking behavior and operational soundness remains a question warranting further exploration.
Since the implementation of the deposit insurance system in China in 2015, it has played a positive role in protecting depositors' interests and managing risk events. Nevertheless, how to better leverage this system to strengthen bank stability and curb excessive risk-taking remains a pressing issue. To address this question, this paper conducts an empirical analysis of 124 rural SMBs in China participating in the deposit insurance program. The study aims to reveal how the system affects banks' risk-taking by shaping the deposit structure and liability stability.
Empirical results show that banks with a higher proportion of insured deposits exhibit stronger operational stability and significantly lower risk-taking. Specifically, the deposit insurance system improves liability stability, reducing exposure to market fluctuations, while also restraining banks' excessive risk-seeking behavior on the asset side. Hence, the system plays a key role in strengthening SMBs' resilience and preventing bank runs.
This paper further identifies two mechanisms through which insured deposits affect risk-taking. Firstly, they stabilize the liability side, enabling banks to better manage liquidity pressures and reduce reliance on external financing. Secondly, they suppress asset-side risk-taking by lowering incentives to pursue short-term high-yield investments. The combined effect enhances SMBs' internal risk control capacity. Heterogeneity analysis reveals that the effects are more pronounced in regions with intense competition, high marketization, and limited government intervention. Additionally, the effect is stronger for banks with smaller asset sizes and higher capital adequacy ratios.
Through empirical research, this paper demonstrates the positive role of the deposit insurance system in enhancing the stability of SMBs and reducing risk-taking. Based on these findings, the paper offers the following policy recommendations for regulatory authorities and SMBs. Firstly, regulators should enhance dynamic supervision of unsteady deposits, regularly disclose their proportion, and offer risk guarantees to reduce banks' reliance on short-term, high-risk liabilities. Secondly, early-warning systems and stress-testing mechanisms should be strengthened to dynamically assess and manage risks under different economic scenarios. Thirdly, efforts should be made to improve the deposit insurance system, especially in weakly supervised regions, through better policy coordination and increased public awareness. Fourthly, cross-regional risk linkage mechanisms should be established to improve local SMBs' risk management, including regional risk mitigation funds and inter-regional regulatory collaboration. Finally, the application of financial technology in SMBs should be promoted, leveraging big data and artificial intelligence to improve risk warning and management capabilities.

Climate change has become one of the greatest challenges facing mankind. The purpose of this article is to analyze the impact of climate risk stress tests on bank liquidity creation.
Based on theoretical analysis, this article finds that stress tests affect liquidity creation through the credit channel, capital channel, risk-taking channel, and balance sheet channel. Banks increase their expectations of climate disasters, increase loans to environmentally friendly enterprises, and reduce loans to high-carbon enterprises in response to the climate risk stress tests. The“risk absorption”hypothesis implies that bank capital is positively related to liquidity creation, while the“financial fragility”hypothesis suggests that the relationship is negative. The“risk-taking”hypothesis argues that banks take on more risk to increase liquidity creation, while the“risk mitigation”hypothesis holds that banks reduce weighted risk assets to decline liquidity creation. The capital asset pricing theory suggests that higher capital requirements increase liquidity creation, while the“low risk anomaly”hypothesis assumes that higher capital requirements reduce liquidity creation.
The empirical results show that banks participating in macro stress tests increase total liquidity creation due to an increase on the asset side and a slight decrease on the liability side. Based on kernel triangular and Epanechnikov estimation, total liquidity creation increased by about 3% and 4%, asset-side liquidity creation increased by about 5% and 7%, and liability-side liquidity creation decreased by about 1%, respectively. On-balance sheet liquidity creation is higher for stress-tested banks, while off-balance sheet liquidity creation is lower. Banks participating in climate risk stress tests reduce total liquidity creation due to reductions in asset-side and off-balance sheet liquidity creation. Based on kernel triangular and Epanechnikov regression, total liquidity creation decreased by about 40%, asset-side liquidity creation decreased by about 17% and 10%, on-balance sheet liquidity creation decreased by about 27% and 29%, and off-balance sheet liquidity creation decreased by about 7% and 8%, respectively. Before the stress tests, low temperature weather is positively related to total, liability-side and on-balance sheet liquidity creation, while high temperature weather and transition risk are negatively related. The effects of climate risk and macro stress tests on liquidity creation are heterogeneous because of different transmission channels. Banks decrease the total amount of loans to high-carbon industries, and this effect varies across industries. The conclusions are robust, according to continuity hypothesis tests, breakpoint placebo tests, and bandwidth selection sensitivity tests on covariates.
The research offers the following suggestions. Regulator should improve macro stress tests by incorporating climate risk into the stress test scenarios. Furthermore, climate risk stress tests should consider various factors to deal with more complex climate conditions in the future. Particularly, banks should manage corporate carbon footprints in line with their operating characteristics to mitigate the impact of climate risk on liquidity creation. More importantly, the climate risk information disclosure should be strengthened, and banks should embed climate risks into their overall risk management process to optimize the structure of liquidity creation structure.

Under the modern monetary policy framework, communication has become a key instrument for the Federal Reserve to achieve macroeconomic stabilization. The purpose of this study is to identify the non-monetary policy information in Fed communications and to analyze its cross-border spillover effects and transmission channels.
This study employs Federal Reserve press conference texts from 2011 to 2022 and text analysis methods to identify the most frequently mentioned economic concept terms in Fed communications. Then, according to different policy objectives, the study categorizes these economic concept terms, thereby identifying three types of non-monetary policy information in Federal Reserve communications: inflation-related information, economic growth-related information, and financial stability-related information. Subsequently, the study examines the spillover effects of these three types of non-monetary policy information on global stock markets, foreign exchange markets, and long-term government bond markets, while further analyzing the transmission channels of non-monetary policy information.
The findings reveal that the non-monetary policy information in Federal Reserve communications has significant spillover effects on global financial markets. An increase in the Fed's inflation expectations leads to declines in global stock markets and currency depreciation, while the spillover effects of rising growth expectations are the opposite. The spillover effects of financial stability expectations are related to the level of global financial risk: when global financial risk is low, markets are more likely to form a consensus on financial risk, and an improvement in financial stability expectations will lead to rising stock markets, currency appreciation, and declining long-term bond yields in foreign countries. The underlying mechanism lies in how the macroeconomic and financial expectation information conveyed in Fed communications alters the expectations of different market participants, thereby influencing international financial markets through the risk-taking channel, capital flow channel, and trade expectation channel. Specifically, economies with large-scale cross-border capital flows, high risk-taking levels, and high dependence on foreign trade are more vulnerable to the negative shocks of Fed communication.
To guard against external shocks stemming from non-monetary policy information, this paper proposes three policy recommendations for China. Firstly, particular attention should be given to the non-monetary policy information in Fed communications, with differentiated response strategies tailored to various types of information shocks, especially focusing on mitigating the adverse effects of inflation-related information and financial stability-related information during periods of elevated financial risk. Secondly, promoting trade currency diversification and the integrated development of domestic and foreign trade can help reduce dependence on the US trade and mitigate the spillover effects of non-monetary policy information in Fed communications. Thirdly, the People's Bank of China（PBoC）should enhance macroeconomic expectation management by leveraging its inherent information advantages to promptly disclose macroeconomic outlook information, thereby guiding market expectations toward sustained and stable development.

This study examines how different degrees of capital market openness affect micro-level responses to geopolitical risks, addressing the critical issue of balancing market liberalization with financial security in China's financial development. Using China's unique“A+H”dual-listing structure as a natural experiment, we investigate whether geopolitical risks have differential impacts on companies listed in both mainland China（A-shares）and Hong Kong, China（H-shares）.
The research is motivated by China's deepening financial opening amid rising global geopolitical tensions. The State Council's“New Nine Articles”issued in April 2024 emphasize coordinating opening-up with security objectives, raising the fundamental question of how to expand capital market openness while adhering to risk prevention principles.
Our identification strategy leverages the“A+H”dual-listing arrangement, where the same company trades in both the mainland China and Hong Kong markets under different capital account regimes: the RMB market with restricted convertibility versus the Hong Kong market with full convertibility. This setting allows us to control for firm fundamentals while isolating the effects of market openness on sensitivity to geopolitical risks. Using the Russia-Ukraine conflict as a quasi-natural experiment, we also examine how geopolitical risks affect the A-H share premium by comparing differential price responses of the same company's shares in markets with varying degrees of openness.
The empirical results reveal several key findings. Firstly, geopolitical risks significantly increase the A-H share premium, and this effect remains remaining robust across multiple verification methods. Secondly, mechanism analysis shows that trading differences between the mainland and Hong Kong financial markets, along with investor expectation uncertainty contribute to the geopolitical risk premium. Thirdly, heterogeneity analysis demonstrates that geopolitical actions have more decisive impacts than threats, with risks from major developed economies significantly affecting A-H share price differentials.
Based on these empirical findings, we propose three policy recommendations. Firstly, establish a geopolitical risk prevention system under opening conditions of openness by developing specialized monitoring and early warning mechanisms, incorporating geopolitical risk assessments into the institutional design of high-level financial opening. Secondly, optimize cross-border capital flow management to achieve a dynamic balance between financial openness and security, given that open capital markets are more sensitive to geopolitical risks. Thirdly, enhance transparency and international communication capabilities in financial opening to strengthen financial market resilience, as high-quality information disclosure can mitigate the negative impacts of geopolitical risks.
This research contributes by providing new theoretical perspectives on the impact of geopolitical risks under different market opening conditions and offers an innovative causal identification strategy for understanding risk transmission, delivering valuable insights for financial regulators and market participants.

The intensification of global climate change has led to a rising frequency of extreme weather events and increasingly stringent environmental regulations, exposing firms to mounting climate-related risks. Against this backdrop, green mergers and acquisitions（green M&As）have become an increasingly important strategic tool for firms to address climate challenges, rapidly acquire green technologies, optimize resource allocation, enhance environmental resilience, and meet the expectations of regulators and stakeholders. While climate risk has received widespread attention in practice, existing literature has primarily focused on its impact on firms' financial performance, cost of capital, or disclosure behavior, with limited exploration of how climate risk influences strategic green M&A decisions and through what mechanisms.
Using a comprehensive sample of Chinese A-share listed firms from 2001 to 2023, this study systematically investigates the impact of climate risk on corporate green M&A behavior. We construct a dual-dimensional climate risk index at the firm level, combining text-based analysis with regional climate indicators, thereby capturing both physical climate risks and transition climate risks. Our regression results show that climate risk has a significant positive effect on the likelihood of firms engaging in green M&A, This conclusion remains robust under various tests, including controlling for industry and time fixed effects, using alternative variable specifications, and addressing potential endogeneity concerns. Further mechanism analysis reveals that climate risk promotes green M&A through three main channels. Firstly, it increases managerial attention to environmental responsibilities and enhances environmental awareness, prompting firms to incorporate green transition into their strategic planning and acquire relevant technologies and capabilities through M&A. Secondly, climate change imposes substantial operational pressure on firms' production and operations, compelling them to improve resilience and competitiveness via green acquisitions. Thirdly, persistent media attention to climate issues and corporate environmental performance reinforces external monitoring pressure, driving firms to take proactive actions such as green M&A to improve their environmental image.
Additionally, the study conducts a series of heterogeneity analyses. The positive effect of climate risk on green M&A is more pronounced among firms with larger size, stronger financing capacity, and better ESG performance. At the industry level, the effect is stronger in sectors with lower competition intensity and higher market entry barriers. From the perspective of investor structure, firms with higher holdings by ESG-oriented funds tend to respond more actively to climate risks by engaging in green M&A, highlighting the supervisory and guiding role of institutional investors in promoting corporate green transition.
This study makes several key contributions. Firstly, it expands the scope of research on climate risk and corporate strategic behavior by focusing on the relatively underexplored domain of green M&A. Secondly, it develops a novel firm-level climate risk index based on text mining, integrating both physical and transition risk dimensions, thereby enabling more accurate identification of firm-specific climate risk exposure. Thirdly, by revealing heterogeneous M&A responses to climate risk across firms and industries, the findings provide valuable empirical evidence for policymakers to design targeted and refined climate-related policies.