China’s exchange rate regime has undergone gradual reform since the move away from a fixed exchange rate in 2005. The renminbi has become more flexible over time but is still carefully managed, and depth and liquidity in the onshore FX market is relatively low compared to other countries with de jure floating currencies. Allowing a greater role for market forces within the existing regime, and greater two-way flexibility of the exchange rate, are important steps to build on the progress already made. This should be complemented by further steps to develop the FX market, improve FX risk management, and modernize the monetary policy framework.
In the early years of the twenty-first century, China s continuing large current account surpluses and rapid accumulation of foreign exchange reserves have focused considerable global attention on the value of the Chinese currency and the feasibility of its exchange rate regime. Given the fact that any change in China s exchange rate will have a major impact internally as well as externally, the issues of the renminbi appreciation and the optimal option for China s exchange rate regime have become of major concern to China and many other countries. Very little academic literature exists on clarifying these issues theoretically and empirically in an integrated framework and in light of the Chinese distinct experience. This book, therefore, provides a new insight into China s exchange rate policy by applying a macroeconomic-balance approach to analyse the equilibrium exchange rate and the desired exchange regime for China in favour of its required macroeconomic adjustment. The analysis should help build a more informed dialogue between China and the rest of the world and should be also useful to professionals in government, business and other academic organisations.
The imbalance between China’s currency, the RMB, and those of other countries is widely regarded as a major problem for the world economy. There was a reform of China’s exchange rate mechanism in 2005, following which the RMB appreciated 17% against the US dollar, but many people argue that further reform is still needed. This book reports on a major research project undertaken following the 2005 reform to assess the impact on China’s economy. It considers the impact in a number of areas of the economy, including export-oriented companies, the banking industry, international trade, international capital flows, and China’s macroeconomic policy. It concludes that the policies pursued so far have been correct, and that further reform, both to the exchange rate, and to the system overall, would be desirable, but that any reform should be gradual and incremental, preserving economic stability, and integrating changes with reform in other parts of the economy.
The author of this book is the original proponent of China's exchange rate system reform announced in 2005. This book discusses:Through these discussions, the author hopes to share his knowledge on macroeconomic policy management accumulated over the past thirty five years. In particular, he would like to share his insights on macroeconomic policy management before, during and after an asset inflation era or a crisis period. He would also like to warn policy makers and financial investors on the likelihood of an asset bubble and then a crisis in economies outside the US. The author hopes this book could eventually stimulate the emergence of “macroeconomic policy management” as a new and important discipline in economics.While the focus of the book is on macroeconomic policy management, it also offers important lessons and strategies on share and property investments. Thus, economists, policy makers, central bank officials, economics students, business and finance professionals, individual investors and academia in other disciplines will find the book useful.
Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Domestic and International Monetary Policy, Trade, and Technology
East Asian exchange rates have become a global flashpoint. U.S. policymakers blame artificially low Asian currency values for global imbalances, including America's ballooning current account deficit. The solution, they argue, lies in some combination of greater exchange rate flexibility and the appreciation of Asian currencies against the dollar. Asian officials recognize the need to let their exchange rates rise, but they fear that would hamper growth and cut sharply into the value of their dollar reserves. Toward an East Asian Exchange Rate Regime offers a timely and comprehensive analysis of the resulting debates, drawing on expertise from China, Japan, South Korea, and the United States. The introduction reviews the issues at stake, sketches a variety of proposed exchange rate regimes, and discusses comparisons between East Asia and the West. Subsequent chapters examine the connection between global financial imbalances and East Asian monetary cooperation, China's potential role in regional coordination, the relationship between monetary and trade integration, and different paths toward regional cooperation. Authoritative yet concise, this is an essential primer on East Asian monetary integration. Contributors include Gongpil Choi (Korean Institute of Finance, Federal Reserve Bank of San Francisco), Masahiro Kawai (University of Tokyo, Asian Development Bank), Kwanho Shin (Korea University), Yunjong Wang (SK Institute), Masaru Yoshitomi (RIETI,Tokyo), and Yongding Yu (Chinese Academy of Social Sciences).
Currencies are often the targets of speculators and the sometimes reflections and engines of a country's prosperity. They affect consumption rates, political stability and industrial success. Exchange rates are carefully set and endlessly analysed and changed. This book presents leading contemporary issues related to currencies and globalisation.
