Renminbi from Marketization to Internationalization

A solid investigation on China's floating exchange rate regime explains why most countries favor a floating exchange rate regime under the existing international monetary system, based on discussions at the IMF and experts from the CME Group and the London FX market.

Format: Hardback
Length: 128 pages
Publication date: 16 May 2022
Publisher: Taylor & Francis Ltd

A comprehensive examination of China's floating exchange rate regime delves into the compelling reasons why the majority of countries opt for a floating exchange rate system within the existing international monetary framework. This insightful analysis draws upon extensive discussions on exchange rate policies under the supervision of both multilateral institutions like the International Monetary Fund (IMF) and experts from prominent financial markets, including the CME Group and the London FX market. By examining a range of cases, experiences, and lessons from countries such as the United States, Japan, India, Russia, Brazil, Argentina, Egypt, and Pakistan, this study provides valuable insights into the complexities and dynamics of floating exchange rate regimes.

The benefits of a floating exchange rate regime are extensively discussed. Firstly, it allows for greater flexibility in adjusting currency values in response to economic and financial market conditions, promoting stability and preventing excessive fluctuations. This flexibility is particularly important in emerging markets, where economic shocks and volatility are more prevalent. Additionally, a floating exchange rate regime fosters international trade and investment by eliminating exchange rate barriers and promoting price competitiveness.

However, managing a floating exchange rate regime also presents challenges. One of the primary concerns is the potential for currency depreciation, which can lead to increased inflation, reduced export competitiveness, and economic instability. Countries must carefully monitor their exchange rates, implement monetary policies, and maintain foreign exchange reserves to mitigate these risks.

Furthermore, the role of central banks in managing floating exchange rate regimes is crucial. Central banks play a vital role in maintaining price stability, implementing monetary policies, and managing foreign exchange reserves. They must strike a balance between stimulating economic growth and ensuring that inflation remains within manageable levels.

In conclusion, a solid investigation on China's floating exchange rate regime sheds light on the reasons why most countries favor a floating exchange rate system under the existing international monetary system. By examining the benefits and challenges of floating exchange rate regimes, this study provides valuable insights into the management of currency values and the role of central banks in promoting economic stability and growth.

Weight: 420g
Dimension: 216 x 138 (mm)
ISBN-13: 9781032305509