Rmb Exchange Rate Regime Choice

The exchange rate is one of the basic economic policies and the ties between a country's foreign economic. With the development of China's economy, the influence of China is expanding in the international market. So there are more and more countries pay attention to RMB exchange rate system and give their criticisms to it. Though, at July 21st, the system has been changed to a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies, there are still many debates on it, which is also why I write this paper.Firstly, the paper gives a review on some important theories about how to choose a country's exchange rate system and the debate about RMB exchange rate system. Then it gives the analysis about the effect and existing problems of current exchange rate system. Basing on the analysis and important theories, this paper gives a empirical study on the choice of RMB exchange rate system. The result is that the floating exchange rate system is the best choice of China. With incomplete financial market and foreign exchange market, the change to floating exchange rate system can't be done in short time. At last, in view of other's countries successful reform of exchange rate system, the paper gives suggestions to time and route of RMB's reform.