Abstract: Currency internationalization not only lowers the sensitivity of investment to interest rate, but also increases the sensitivity of financial assets price to interest rate, which lowers transaction cost and promotes transaction efficiency for economic system. As a result, the IS and CC curves slope more steeply downward and the LM curve slopes more gently upward than they do without currency internationalization. So transmission mechanism of monetary policies and their effects are weakened in interest rate channel as well as in credit channel, but the latter have comparative advantage. Therefore, we must devote major efforts to developing and reforming financial structures (banks) and their credit under the currency internationalization circumstances. At the same time, currency internationalization may not be promoted hastily but gradually.