Fixed Exchange Rate Regime Versus Capital Control
The belief that the fixed exchange rate regime brings with it stability is only partly true, since speculative attacks tend to target currencies with fixed exchange rate regimes, and in fact, the stability of the economic system is maintained mainly through capital control. A fixed exchange rate regime should be viewed as a tool in capital control.
For instance, China has allowed free exchange for current account transactions since December 1, 1996. Of more than 40 categories of capital account, about 20 of them are convertible. These convertible accounts are mainly related to foreign direct investment. Because of capital control, even the renminbi is not under the managed floating exchange rate regime, but free to float, and so it is somewhat unnecessary for foreigners to purchase renminbi.
Read more about this topic: Fixed Exchange Rate
Famous quotes containing the words fixed, exchange, rate, regime, capital and/or control:
“At first I intended to become a student of the Senate rules and I did learn much about them, but I soon found that the Senate had but one fixed rule, subject to exceptions of course, which was to the effect that the Senate would do anything it wanted to do whenever it wanted to do it.”
—Calvin Coolidge (1872–1933)
“To coöperate in the highest as well as the lowest sense, means to get our living together. I heard it proposed lately that two young men should travel together over the world, the one without money, earning his means as he went, before the mast and behind the plow, the other carrying a bill of exchange in his pocket. It was easy to see that they could not long be companions or coöperate, since one would not operate at all. They would part at the first interesting crisis in their adventures.”
—Henry David Thoreau (1817–1862)
“Writing a book I have found to be like building a house. A man forms a plan, and collects materials. He thinks he has enough to raise a large and stately edifice; but after he has arranged, compacted and polished, his work turns out to be a very small performance. The authour however like the builder, knows how much labour his work has cost him; and therefore estimates it at a higher rate than other people think it deserves,”
—James Boswell (1740–1795)
“I always draw a parallel between oppression by the regime and oppression by men. To me it is just the same. I always challenge men on why they react to oppression by the regime, but then they do exactly the same things to women that they criticize the regime for.”
—Sethembile N., South African black anti-apartheid activist. As quoted in Lives of Courage, ch. 19, by Diana E. H. Russell (1989)
“Mr. Whistler always spelt art, and we believe still spells it, with a capital “I.””
—Oscar Wilde (1854–1900)
“I don’t think I was constructed to be monogamous. I don’t think it’s the nature of any man to be monogamous.... Men are propelled by genetically ordained impulses over which they have no control to distribute their seed into as many females as possible.”
—Marlon Brando (b. 1924)