The Gradual Relaxation Of The Exploration Of The Rmb Under The Capital Control

Over the past two decades, many countries in the developing world have benefited from relaxing restrictions on capital movements. China realized current account liberalization in December 1 996.From then on some people began to discuss when capital account would be liberalized. But East Asia financial crisis demonstrates the importance of a strong macroeconomic stance, sound financial institutions, and an orderly sequencing of reforms to maximize the benefits and minimize the risks of capital account liberalization. It is expected soon that China will join WTO. And it will bring about chance and risks. This paper presents significance, limitations and measures to relax restrictions on capital account. This paper is organized as follows: In section one. I give a brief introduction of benefits to liberalize capital account. In section two, I dwell on progress China have made and deficiency still exist during financial liberalization. In section three, I research principle in proper sequence, precondition interest rate reformation and regulatory frameworks. In section four, I debate risks and supervisory measures in opening capital account.