The Study Of RMB Exchange Regime Reform

July 21, 2005, the PBC issued a notice that China would implement the market-based managed floating exchange regime with referring a basket of currencies. That was a major reform of the RMB exchange regime initiatives.Exchange regime is regime controlled by the monetary authorities of one country who determine its own level of the exchange rate, and exchange rate movements by means of a series of arrangements or provisions. As the exchange rate level and adjustment has far-reaching implications for the entire national economy, and different exchange regime means that the government itself in the process of achieving internal and external balance required different rules. Traditional view fixed exchange rate regime more suited to the developing countries and the developed countries should take the floating exchange regime. Throughout the development trend of international exchange regime, especially the outbreak of some financial crisis in 1990s, a large number of developing countries had to give up the fixed exchange regime and the intermediate exchange regime to a floating exchange regime, it' is contrast to the traditional view. Floating exchange regime also occupies the dominant position in the world exchange system.RMB exchange regime is important to China's economy. China's economy is impacted by it in all areas. A comprehensive analysis of this reform is necessary. From the contents and motivation of the reform, the reform of RMB exchange regime from pegged to the U.S. dollar in the form of the fixed exchange regime to a managed floating exchange regime is designed in the pursuit of monetary policy effectiveness and reduce the Chinese RMB appreciation pressures. From the timing and manner of reform, the reform of the RMB exchange regime, China chose a relatively relaxed domestic and international economic environment.Although the RMB exchange regime reform will increase the effectiveness of China's monetary policy, improve the balance of payments imbalances, and promote the improvement of China's financial market, so as to achieve the healthy development of China's economic security. But at the same time there are some problems accomplished, including China's monetary policy "nominal anchors" deficiencies, and rising the exchange rate risk arising from the reform of exchange rate regime itself contradictory.