The Selection Of Exchange Rate System And Its Influence To Regional Trade In East Asia

This paper discusses the choice of exchange rate system in East Asia, and makes a comment to the current policy recommendations which are popular. According to the specific circumstances of East Asia, the paper proposes a new path choice, and the arrangement of this path will have a great effect to the East Asian intra-regional trade.First, the author think that the fixed exchange rate system is not suitable for East Asia .the fixed exchange rate system refers to the currency board system and the East Asian region "dollar." .First, the currency board system have a lot of limitations ,for example, the loss of its independence in monetary policy , the possibility of using the exchange rate to adjust the balance of international payments, restrictions on the implementation of fiscal policy, foreign exchange reserves can not completely meet cash requirements. These deficiencies decide that it is only suitable to small open economies, but, East Asian regional trade, foreign investment has diversified characteristics, it not only has major developed economies like Japan but also has large developing country like China, so, in the East Asian region, the currency board system is unlikely to be accepted. Now, let us think about East Asian region "dollar.", it is suitable for the follow economies : (1) The small open economies which is highly dependent on the American economy, due to the adverse effects of changing rate which is unsustainable for them , such as a small country in Central America, implemented"dollar"will do more good than harm for it. (2) Experienced, and even repeated the hyperinflation of the currency which has lost confidence for their own currency, such as Argentina, the"dollar"can be given (3) Countries with a high degree of economic integration with the...