Exchange Rate System: The Further Opening Up Of The Theoretical Framework Of China's Financial Choice

Both Latin American debt crisis, currency crisis in 1980s, and Asian financial turbulence in 1 990s which took off in Thailand have shown that inappropriate exchange rate regime is an important causal fac~or for crisis. After these crises, many economists and central banks began to reconsider the choice of exchange rate regime. As for china, in further financial opening-up, there exists following questions:1.What exchange-rate regime is the present one in fact, which is somehow described as "manage floating regime"? What are its major disadvantages in practice? Is it necessary to alter this regime?2.If change is necessary, in the milieu of further financial opening-up, what is the best choice for china's exchange-rate regime?Researches on preceding questions have theoretical as well as practical significance.In order to analyze the specific questions of Chinese exchange-rate regime choice, this paper in first place sets up a general theoretical model for analysis, which follows the academic tradition in this area yet makes progress and revisions on the basis of former research results. This model has following main points:1.The economic background determines exchange-rate regime and its evolvement. The appropriate choice of exchange rate regime is dependent on至 facton falling Into four categones:macroeconomlc vClants； nucroeconomlCIths九七一回b一二6is刘医二一曲七十一囱L互Ctllt6二fillBllC18lllltCgrBt1Ollb3一七二二日匹一【grolllld3lldC一一一一一一一一一一一一一零一一一二三全厂SPOCltlOlmrrerence．12 nthe milieu offinancial i血e队atlon,ixedrate regime has remenaousIdofedS．Flfst．it is iffiDOSSlblC fofth6 CC血al bs业to dCVICC O成 M CMlltDltDllllIexchanec r咖 and efficiency loss ill occur as result．Second,under ixed rateIreslme monetsfVpohcy wu bs重 IIs ndepmdence．Third,tlxedra比 regime nasj intTinsic lust血ility ndndis vulner沁leto speculative甜acks．rourth,scarcelycanImonev smnlv nollcv st劝lllze puce nor can It co血am nn的on unner tinsIfCHlffil．I3．sDeakinRlllgellefal,On山ebaSISOfth 毗ettheChtosthnogn 吕IOXChAnRC fatC fCglthC ISIkOly to pOSSCSS hC 3dV8lltsgC OfonhgnClllg allOCat1OllIefficlencv of foreign exchange,thus promoting social bmetlts,but at PresemIChlnadoes notnossess the preconditions for floating regime,unaer wnlcn uleD embanhanae rate Is s峋ect to multiple equlllbnum and overly vanalon．ISeeond．based on n赐ce山ng gCneral model,this p叩er conimus to e邓l皿lsneclfic and n叨lcular ouestlons concerning China"s toreig e肌nan驴 r批Irealme choice Inthe process otm讪ertlnanclal openingup．11．Following assumPtions reholdlntheProProcess o1Lhlna"S rUnnoItlllallC181 ODC口lllg liP:IFirst．China is mthe Drocess oftTansltlon toward恤et economy．oecona,fZ G叩lt31nOW Is lffipCMCt．肌IkIUAB 3dVmClflg tOW缸d 8 COllVCrtlNC CUnCllCy under caPital account,there exists imperfect substlt川abllltybe脓en assets dominated Indomestlc c皿ency and In forel邵 currency．This assumption lsthe basis for and an essential constraint ofmodeling china's foreign exchange rate regime． 2．Clllna's present exchange rate regime,so called"manage floating regime" Is In fact a ixed rate regime pegged to dollar,which has following isadvantages: ①Because of＊thee difficulty In determining equlllbnum exchange rate,the a山ustme血s ofexchange rate are not made on good grounds． ②Excessive demand缸 foreign exchange willl证ely give rlseto"rem seebng" behaviors,which Increase transaction cost,resulting In net IOSS Of social benefits。 ③The centralba讪"s foreig'n exchange reserve Is e阳osed to remendous isk． Meanwhne,ols llnd ofreglme can not meet过he need hr China's刊＂her financial opening up In various aspects: ＊JUnder Intluence of various factors,h e central...