The Choice Of RMB Exchange Rate Regime

Nowadays, the world is more and more open and globalization is the inconvertible trend with the development of world economy. The proper choice of exchange rate regime is very important for any country because exchange rate as one of key variables plays a very important role in adjusting external economy. Thus different countries should properly and promptly adjust their exchange rate regimes chosen in different stages according to their own situations. The country will be faced with economic and financial insecurity and instability if it chooses improper exchange rate regime, which can be proved by a series of financial crises that has happened in newly emerging market economy countries since the 1990's. As a result, the choice of exchange rate regime has become the focus in such fields as international finance and international politics etc. Since 2002, the choice of RMB exchange rate regime has attracted concern from both scholars and international politicians, who put forward the requirement that RMB exchange rate regime should be withdrawn from the fixed dollar-pegged exchange rate regime to carry out a more flexible exchange rate regime. Based on our economic and financial situation, it is improper for us to withdraw from the fixed dollar-pegged exchange rate regime at present, but RMB exchange rate regime should become more and more flexible, as our economy develops and capital account liberalization speeds up.Our nominal exchange rate regime present is a supervised, simplex and flexible exchange rate regime on the basis of market supply and demand, but IMF classifies our exchange rate regime as other traditional fixed pegged exchange rate regime which is similar to that of newly emerging market economy countries which have experienced financial crises. As far as foreign and domestic pressure RMB exchange rate is facing is concerned, it is necessary for us to seriously consider how to adjust RMB exchange rate regime to the requirement of our economic and financial development under the circumstances of economic globalization? This thesis discusses about the path choice of RMB exchange rate regime and analyses its evolution and choice from an empirical angle, by referring to the theories of exchange rate regime choice at home and abroad.The thesis consists of four parts, whose structure and main contents are asfollows:The prelude introduces its background and literature reviews and puts forward some questions to be settled further.Chapter One analyses traditional theories related to the choice of exchange rate system, its theoretical hypotheses and empirical theories based on its classification and evolution, and briefly comments on the theories by combining RMB exchange rate regime.Chapter Two puts forward that the current RMB exchange rate regime is a supervised and flexible exchange rate regime nominally but it is a fixed dollar-pegged exchange rate regime actually by taking its evolution as a cut-in point and analyzing its characteristics and existing problems, gives an empirical and feasible analysis of its choice, analyses the complexity of its choice and finally raises that the current RMB exchange rate regime is supposed to remain same.Chapter Three analyses the reformational tropism of the current RMB exchange rate regime under opening up our finance further by taking the theories of exchange rate regime choice and economic Trilemma as a basic frame, indicates that the choice of RMB exchange rate regime needs to be considered again by not sacrificing the independence of our monetary policy during the process of our capital account liberalization, and puts forward that the fixed dollar-pegged exchange rate regime is a better choice to keep the stability of RMB exchange rate by relating to our actual economic situation. It is obvious that the structure of mighty government remains same during the process of our economic transition. Therefore, the target zone system of exchange rate is a preferable choice by referring to Krugman's model of the target zone system of exchange rate. The curre...