Research On The Opening Of Capital Accounts And The RMB Exchange Rate Regime Reform

The globalization of economy is the trend of the world, the international flow of resource (capital, technology, labor etc) is the basic character of the globalization economy. Many countries had loosened their regulation with the capital account from 1970s. The marginal yield of capital can be raised which it under the condition of free flow. At the same time, this flow can give rise to the optimized distribution. As far as the developing countries concerned, the opening of the capital account will encourage the inflow of foreign capital and solve the capital absence in the process of developing. And the inflow of FDI can bring about international competitive mechanism, which is very important in improving the market function and efficiency.But we must know that the capital account opening is a double edge sword, in accelerating the economy increasing, it will also bring big risk. It is essential to hold the timing and process of opening. Otherwise it will bring huge impact on the macroeconomy, exchange rate level and lead to economic crisis. It has been an important research project for many countries.The opening of capital accounts should be under the condition of steady macroeconomic environment, the finance reform and liberalization of trade, flexible exchange rate etc, and the exchange rate has been considered one of the most important elements. The related international finance theory( the M—F model, the interest parity, the purchase power parity etc) be used in this paper to analyze the relation between capital accounts opening and the RMB exchange rate reform. The conclusion is that the exchange rate must be reformed before opening the capital account. The floating interval should be expanded in short time; the intermediate target is to alter the present regime to stick-to-a basket of money; and the final target of reform of exchange rate is the free floating regime.