Title: Problems of China's Current Exchange Rate Regime and Solutions
Abstract: Reveals the fact that China's current exchange rate regime has been pegging at the USD in practice though nominally it is administrated via a controllable floating exchange rate regime. Analyzes the problems of the current exchange rate regime as follows. Either the demand or the supply doesn't reflect those individuals who intend to participate in the exchange rate market. The cost to maintain the current exchange rate is rather high and the factors affecting the current exchange rate is rather single. The exchange rate market is lacking in both dealers and sorts of exchangeable currencies. The adjusting mechanism of exchange rate is imperfect and currency policy is restricted to a certain extent. Some operable measures/policies are therefore suggested to take, such as increasing the flexibility of exchange rate, reforming the systems of exchange settlement and surrender, changing the current exchange rate regime from pegging singly USD to pegging a basket of mixed currencies and forming an effective transmission mechanism for both exchange rate and interest rate.
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
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