Research On Issues Of Deepening The Reform Of The Formation Mechanism Of RMB Exchange Rate In The Period Of "the Twelfth Five-Year Plan"

Since the implementation of the exchange rate reform in2005, continuously in accordance with the principle of initiative, security and controllability, China has introduced relevant measures to establish and perfect a managed floating exchange rate system, based on the supply and demand of market, and adjusting with reference to a basket of currencies. At present, the purpose of reforming RMB exchange rate system is to promote domestic development. Under the circumstances, it appears to be important that how to achieve this goal step by step in the short term.Reviewing the related accomplishments of research on the formation mechanism of RMB exchange rate from scholars home and abroad, by tracing the forming track of the current RMB exchange rate regime, this paper compares characteristics of China’s exchange rate system with the definition of the IMF exchange rate classification, then comes to a conclusion that our country still belongs to the traditional pegged exchange rate arrangement so far. Centering on China’s economic and social development goals in the short period of the "Twelfth Five-Year Plan", this paper argues that RMB exchange rate regime should be changed initiatively, in order to promote the achievement of these goals better. After analyzing the advantages and disadvantages of the current RMB exchange rate system, it puts forward relevant measures to reform it in the short run. Among which, the reforming measures for the formation mechanism of RMB exchange rate mainly include:increase the flexibility of fluctuations of RMB against U.S. dollar exchange rate, carry out the asymmetric exchange rate fluctuations; relax the management of the bank’s exchange settlement and position limits; cancel the volatility restriction of RMB against major non-dollar currencies on the foreign exchange market among banks; gradually loose capital project control. The relevant supporting measures for perfecting the formation mechanism of RMB exchange rate include:improve the foreign exchange market; propel the market-oriented reforms of the interest rate; reform the banking system.