The Theory On Currency Basket Peg And The Study Of Exchange Rate Regime Reform In China

The choice and arrangement of the exchange rate is always a crucial and decisive factor. As far as the developing countries'concerned, how to choose the right exchange rate regime will have a significant influence on the financial stability and economic security of a country. China has transformed the exchange rate regime from fixing to the dollar to referring to the currency basket. The exchange rate mechanism become more market-oriented, which enlarge the uncertainty and complexity of the violation of exchange rate. However, the exchange rate reform is just a beginning, for some related reforms of other mechanisms will be followed. Including the exchange rate floating band, the intervention system,the exchange rate market reform and the monetary and fiscal policy will restructure later, which aims at carrying forward the development of the exchange rate regime.The main content and structure of the paper is as follows:Introduction: The exchange rate that fixed to the dollar has no longer suitable to China during the economic and financial globalization background, especially the inevitable open of capital account, therefore we choose the exchange rate regime by referring the exchange rate to currency basket.Chapter 1: This section briefly introduces the researches on the currency basket theory and the BBC (Basket, Band, Crawl) management floating exchange rate regime, the inherent feature of currency basket peg, weighting scheme to determine an optimal currency basket and the practical operations. Meanwhile, this part introduces the opinions that focused on the difficulty when operating the currency basket before and after the July 21st exchange rate regime.Chapter 2: This section analyzes the developing route and the cause of the exchange rate regime transformation. In the problem of discussing the weight of the currency basket, we conclude the optimal weight of East Asian by focusing the object of the export competitiveness, foreign currency debt and the imported inflation. On the question of deciding China's optimal currency weight, we use the currency weight calculated by the Flanders & Helpman model to analyze RMB exchange rate violation.Chapter 3: This section briefly introduces the exchange rate regime of Singaporeand its external microeconomic environment. On the basis of the successful experience of Singapore's exchange rate regime, we start to ponder upon the reforms of some relevant regimes in China, which can provide the essential guarantee for the success of the exchange rate regime.Chapter 4: This section summarizes four chapters above, and outlines the core of the paper.