The Choice Of Exchange Rate System In The Process Of Financial Integration In Developing Countries:Theory And Demonstration

Developing countries shoulder the important task of maintaining domestic economic growth and economic stability,so their domestic policies and systems are mainly aimed at ensuring the smooth progress of these two objectives.Historically,when developing countries adopt different paths and different approaches to reform,they will lead to very different macroeconomic performance.Based on this,this article through the search,collecting and collating relevant literature on international financial integration in the background,with the theoretical innovation and practical significance of the research on the choice of exchange rate regime and economic growth in developing countries.Based on the theoretical model and the empirical analysis,the conclusion is drawn that the higher the degree of financial integration based on the nominal measurement method,the more inclined the developing countries are to implement a more flexible floating exchange rate system.However,the results of the fact finding method show that the higher the degree of financial integration in developing countries,the more likely it is to choose a less flexible exchange rate regime.As far as the actual situation of China is concerned,the conclusion described by the nominal measurement method is more representative.Since the reform and opening to the outside world,capital control has been gradually liberalized,financial openness has gradually improved,and the more inclined to implement a more flexible floating exchange rate system.At present,China's exchange rate system is managed floating,and in the future,China may achieve a completely floating exchange rate system.Changes in the future exchange rate regime will lead to more dramatic and frequent exchange rate fluctuations.Although China has basically completed the interest rate market,but there is still a certain distance from the full liberalization of interest rates,which will affect the reform of China's exchange rate system.From the fixed exchange rate to the floating exchange rate,the average rate of economic growth will decline,so China should gradually liberalize the control of capital account and increase the level of financial openness.But combined with overseas experience,affect the account,rapid capital market interest rates to accelerate the opening will have on the exchange rate fluctuations will be unpredictable,and the continuing financial system of our country healthy and stable development is also a disadvantage.Therefore,for developing countries,including China,it is an important guarantee to realize the market-oriented reform of the exchange rate formation mechanism while opening up the capital account and implementing appropriate control afterwards.Under the background of gradual flexibility of the RMB exchange rate formation mechanism,China should implement the supervision of capital flows.On the issue of financial integration reform,China still needs to consider carefully the supervision,management and control ability of cross-border capital flows.