Marketization of Interest Rate and Exchange Rate --Should Start from Reforming the Method of RMB Issuing
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| Title | Marketization of Interest Rate and Exchange Rate --Should Start from Reforming the Method of RMB Issuing
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| Author | Hu Haiou and Ji Bo |
| Organization | Shanghai Jiao Tong University |
| Email | hohu@sjtu.edu.cn；jibo@sjtu.edu.cn |
| Key Words | Interest Rate; Exchange Rate; Marketization; Method of Currency Issuing |
| Abstract | Interest rate and exchange rate are the intrinsic and extrinsic value of the supply and demand of currency in nature. So to realize the marketization of interest rate and exchange rate should properly reflect the supply and demand of RMB. The paper demonstrates that the current method of RMB issuing, which is purchasing RMB to issue foreign currency, twists the supply and demand of currency and consequently twists the determination and fluctuation of interest rate and exchange rate. Under this circumstance, only releasing the control of the interest rate and exchange rate and neither build up the prerequisite of releasing the control, nor finding the substitute for regulation to release the control. As the result, the interest rate and exchange rate might not be able to balance and fluctuate properly and finally going backward to government order. To sum up, the marketization of interest rate and exchange rate should start from the reforming the method of RMB issuing. |
| Serial Number | WP646 |
| Time | 2014-08-08 |
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