 |
RMB Exchange Rate System to Be More Adapted to Market
China will continue to stabilize its foreign exchange rate and in the meantime to fully utilize the daily 0.3 percent floating rate to adapt the market to exchange rate fluctuation, according to Zou Lin, deputy director of the international payment department of the State Administration of Foreign Exchange (SAFE).
Zou said that the current RMB exchange rate mechanism was established before the exchange rate reform in 1994, it is a unitary, managed floating exchange rate system based on market supply and demand. He disclosed that China will contrive four concepts for making the said mechanism more market-oriented in the future:
First, to effectively utilize the floating margin of inter-bank market exchange rate, so as to gradually adapt the market to exchange rate fluctuation.
Second, to unify the corporate relationship between national foreign exchange transaction center and local sub-centers and clearly define their rights, duties and interests. As an independent foreign exchange dealer, the center should make its decision or choice according to market demands, so that the market can truly reflect the relations between demand and supply. SAFE, as a manager of China's foreign currency exchange market, is responsible for formulating principled and guidance policies.
Third, to adjust the vehicle cash manage policy on the bank's settlement and sales of foreign exchange. Consideration can be given to adjusting the lower limit of vehicle money supply of the bank's settlement and sales of foreign exchange to zero, and allowing the bank to hold a zero monetary position. This means that the bank can decide its money supply according to the situation of the market.
Fourth, to further improve the settlement system, so that the real relationship between supply and demand can be fully reflected in the market. In line with the goal set for this year's work, the emphasis is on further strengthening the authenticity of and standardized supervision over the business operation of domestic settlement institutions.
By PD Online staff member Li Yan
In This Section
|