Currency System Reform: International Experiences and China's Choices

Author: Zhang Liqing
Publisher:
Publish Date: 2005-06-01
Features: The exchange rate policy of the RMB can draw some lessons from Japan's exchange rate policy over the past three or four decades. Phasing in exchange rate system reforms and managing the gradual adjustment of the RMB exchange rate level are crucial for maintaining exchange rate stability. To this end, pegging the RMB to a currency basket consisting of the US dollar, Japanese yen, and euro, while allowing the exchange rate level to crawl within a larger floating range, is the best choice. — Professor Kazuo Kawai, Faculty of Social Sciences, Tokyo University
Economic growth and stability are two key issues to consider when choosing an exchange rate system. I hope we can conduct more in-depth and thorough research and understanding on the reform of the RMB exchange rate system. This way, our actions can be faster and more confident. — Professor Wang Chuanlun, Senior Professor, School of Public Finance and Financial Studies, Renmin University of China
Managed floating is the medium- and long-term goal of the RMB exchange rate system reform. The exit from the peg requires certain preconditions, among which a healthy domestic financial system and a relatively mature foreign exchange market are most important. The best time for exit is when the international (international balance of payments surplus) significantly declines and the expectation of appreciation largely disappears. Current research on reducing the international is more important and urgent than considering the RMB exchange rate system reform itself. In the absence of a temporary exchange rate policy framework, the adjustment of the international can mainly rely on trade and capital flow policies. — Professor Zhang Liqing, Director, International Finance Research Center, Central University of Finance and Economics
China's own experience is also worth considering when choosing the RMB exchange rate system. From a historical perspective, we can draw valuable policy conclusions that will help shape the future of the RMB exchange rate. The RMB exchange rate reform that began in the early 1980s contains rich content, particularly noteworthy is that China successfully transitioned from a fixed exchange rate system to a more flexible one during this period, a success unmatched by any other country in the world. — Professor Zhang Zhichao, President, China Economic Society (UK)
This book is a product of the international seminar "Exchange Rate System Reform: International Experiences and China's Choices," featuring 24 papers. It provides a detailed introduction to international experiences in exchange rate system reform and the reform of the RMB exchange rate system. It is divided into three main parts:
1. Exchange Rate System Reform: Theory and International Experience.
2. Reform of the RMB Exchange Rate System.
3. RMB Real Exchange Rate, Foreign Exchange Market, and Capital Flows.
The content covers:
(1) Trends in the evolution of exchange rate systems since the 1980s;
(2) New developments in exchange rate system theory since the mid-1990s;
(3) Determinants of exchange rate system choice;
(4) Strategy and policy framework for exiting the "pegged exchange rate" system;
(5) The interrelationship between exchange rate arrangements, capital flows, and monetary policy;
(6) Cultivating the foreign exchange market and reforming the exchange rate system;
(7) The history, current status, and reform goals of the RMB exchange rate system;
(8) Preconditions, timing, and supporting policies for the RMB exchange rate system reform;
(9) Determinants of the RMB real exchange rate level, and so on.