The Effectiveness Of China’s Central Bank Foreign Exchange Intervention Signal Channels

The Bretton Woods System’s thorough broken-down in1973marked the end of fixedexchange rate system’s. Developed countries began to floating exchange rate regimetransition. During the transition process, developed countries made frequentinterference to the foreign exchange market. Behind each succeed interference, it issignal channel transmission which made a great contribute to it’s succeed. Academicstudies on signal channel transmission mechanism were also rising. Especially since2008, financial crisis in the United States of America affected global economy’sprogress. In order to stabilize our economy, to ensure the healthy and stabilitydevelopment, Chinese central bank gave frequent interference to the foreign exchangemarket. This article on the basis of the signal channel transmission mechanism’seffective theory which is the domestic and foreign scholar gave a specific research, inallied to central bank’s practical interference made an empirical study to theeffectiveness of signal channel transmission mechanism.This thesis is composed of five chapters:The introductory part illustrates the purpose and significance of studying signalchannel transmission mechanism, and provides the thinking and structure of thethesis.The second part starts with the transmission about the signal channel, discussing thetheory, effectiveness of signal channel transmission system specifically. Clarifying theresearch systematically concerned with the approach and effectiveness of signalchannel transmission system from both domestic and abroad.A summarize about the practice which Chinese central bank implement to foreignexchange since1994in China is given in the third part, and making a demonstrablystudy on the applicability matter of implement about the signal channel demonstration.The conclusion is the effect of transmission method in our country is not ideal.The fourth part analyzes the cause of ineffectiveness which the signal channeltransferred in China.The fifth part put emphasis on the problem which exists in the fourth one. Anapproach improves the effectiveness of central bank’s interference subjectively andobjectively. The proposal has advanced that is enhancing the infrastructure of foreignexchange, perfecting the administration of the foreign exchange market and regulatemechanism, strengthening the central bank’s self improve, transferring the function ofthe central bank, and further improving the approach of sterilized intervention. The innovativeness in the process of studying in this article is the specificallyclarification for the demonstration of signal transmission in our country.It still has more to improve in this article because of my superficial learning andinsufficient data. Because of the limited data, the system’s precision will decrease forthe substitute. In the meanwhile, there is only study of the relationship betweencentral bank’s interference and exchange rate, without the research for other economicvariable such as economic growth and employment rate...