Flexibility Management Of RMB Exchange Rate From The Perspective Of The Extended Trilemma

With the increase of exchange rate flexibility,the role of the exchange rate,as a nominal anchor of monetary policy,will gradually decline,and as a cushion to the impact of the external shocks and the role of monetary policy tools will be enhanced.China's monetary policy objectives are often described as "maintaining price stability and to promote economic growth".Although the exchange rate is not clear as one of the ultimate goals of monetary policy,monetary.authority actually use sterilised intervention to avoid a sharp fluctuations of the RMB exchange rate.In the process of integration into the world economy,With the gradual regionalization and internationalization of the RMB,China will be more trapped in Trilemma that open capital account,stable exchange rate and flexible interest rate policy can not coexist.Therefore,from the perspective of macroeconomic and financial market stability,the research of RMB exchange rate flexibility management has important theoretical and practical significance.This disseration attempts to study the theory of exchange rate regime choice,Trilemma and exchange rate target area as the basis of research;Analyze the relationship between exchange rate flexibility,capital flow and monetary policy independence based on Chinese reality;Analyze comparatively the exchange rate elasticity of RMB/USD,the nominal exchange rate and real effective exchange rate of RMB and use empirical analysis method to carry out the rationality test;Select the relevant data to carry out empirical analysis with TVP-VAR model,estimate respectively fluctuation range of RMB exchange rate during the period of boom,crisis and post crisis period taking the real effective exchange rate of RMB as the center;Finally,based on the experience of three economies,summarize conclusions and future work of this disseration.The research shows that:1)when the open economy and the internal and external equilibrium goals are in conflict,the goal of internal equilibrium is superior to the goal of external equilibrium.But in China,we can see that the RMB exchange rate achieved the the goal of external equilibrium.Due to the rapid development of the internationalization of the RMB and the opening of China's capital account,monetary policy effectiveness is still limited,and the goal of internal equilibrium is not achieved;2)compared with the narrow fluctuation range of RMB against the U.S.dollar exchange rate,the exchange rate flexibility of the RMB against non-dollar is high,the fluctuation ranges of the nominal effective exchange rate and real effective exchange rate of RMB are broad;3)the reforms of of the exchange rate flexibility adjustment of RMB are in line with the situation of China.Empirical results show that the impact of government intervention on RMB exchange rate is small,short-term capital flows and exchange rate expectations and other non trading factors can not be ignored,the proportion of U.S.dollar in the RMB currency basket is still too high;4)with the currency diversification of trade and investment,the bilateral exchange rate is difficult to reflect the actual level of the exchange rate,we should pay close attention to changes of the RMB exchange rate against non-U.S.dollar.Real effective exchange rate is an important indicator to measure the international competitiveness of a country's trade goods,we should pay more attention to the stability of the real effective exchange rate of RMB;5)empirical results show that the efffective fluctuation range of RMB exchange rate taking the effective exchange rate as the center exchange rate are 1.6%in prosperous period,1.5%in the crisis period,and 1%in post-crisis period;6)Euro area,Singapore and Czech represent different types of economies and provide China with good experience,we should pay close attention to the long-term equilibrium level of the exchange rate and exchange rate pass-through,and pay attention to the impact of short-term capital flows on exchange rate;7)making the exchange rate formation mechanism more market-oriented,we should design a reasonable exchange rate index of RMB,improve the efficiency of foreign exchange intervention,establish a deep and strong liquidity of the foreign exchange market and strengthen cooperation with other monetary policy tools.From international experience,in the process of changing to a full floating exchange rate regime,its success of transition depends on the effective management of a series of policies.We should not emphasize the level of exchange rate,and exaggerate the effects of short-term exchange rate adjustment.The issue of RMB exchange rate will be an important issue.