Research On The Coordination Of China's Exchange Rate System Selection And Capital Account Management

In the process of RMB internationalization,the reform of the exchange rate system and the opening of the capital account are always two of the most important issues.In order to achieve the dual goal of "steady growth" and "risk control",how should the central bank promote the reform of the exchange rate system and guide the foreign exchange market reasonably under the pressure of economic downward currently,so as to ensure the stability of the RMB exchange rate at a reasonable and balanced level?In the case of the current dollar appreciation cycle and the pressure of a certain depreciation of the RMB,how should the central bank manage the capital account and the cross-border capital flow in order to safeguard the financial environment security?It is noteworthy that these two problems do not exist independently,but are interrelated and interacted with each other.Therefore,it is of great practical significance to study the current exchange rate regime choice and capital account management in China.This paper first analyzes the choice of exchange rate regime without capital account management.By establishing a DSGE model containing both monetary policy and exchange rate policy,we compare the welfare effects of central banks under different exchange rate regimes.It is found that no matter what policy objectives or rules the central bank chooses,the intermediate exchange rate system is better than the polarized exchange rate regime.Then this paper empirically analyses the influence of the stability of the exchange rate system on the independence of monetary policy by using cross-border panel data.The study finds that the negative correlation between the two will be significantly weakened with the improvement of the economic and financial level.Subsequently,the capital account management is introduced into the former model to examine the choice of exchange rate regime including capital account management.Through the establishment of three policy models including monetary policy,exchange rate policy and capital account management policy,the central bank policy combination and welfare loss of different preference types are compared.It is found that the management of capital flows is beneficial to the central bank to reduce the loss of welfare compared to the complete free flow of capital.Therefore,the central bank should simultaneously adopt a combination of the system of intermediate exchange rate and capital account management.Finally,as the quantitative research on the opening of capital account is still concentrated on the level of capital control measured by law at the present stage,this paper constructs a prudent capital flow management index through the method of de-facto,and uses the time series data of China to calculate and analyze it.It is found that the prudent capital flow management policy can effectively regulate the short-term capital flow,but under the shock of emergencies,it still needs to increase the intensity of capital account management to curb the large-scale capital flow.Based on the above conclusions,this paper suggests that:(1)In the choice of exchange rate system,the intermediate exchange rate system,represented by the managed floating exchange rate system,is superior to the completely floating exchange rate system,so there is no need to realize the clean floating of the exchange rate system.(2)While maintaining the stability of the exchange rate system will weaken the independence of monetary policy to a certain extent,there is a nonlinear relationship between the two and then weakened,and the more developed economic and financial level will help to weaken the conflict between the two.(3)When considering the management of capital account,the-combination of management floating exchange rate system and capital account management should be adopted,without the need to pursue high degree of capital account opening.(4)From the aspect of capital flow management,it is necessary to maintain prudent management of capital flow so as to realize the guidance and adjustment of short term international capital flow so as to prevent systemic financial risk.