| Title | : | IMF Policy Discussion Paper: Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China |
|---|---|---|
| Author | : | Eswar Prasad, Qing Wang & Thomas Rumbaugh |
| Release | : | 2005-01-01 |
| Kind | : | ebook |
| Genre | : | Business & Personal Finance, Books |
| Size | : | 25596036 |
| This paper reviews the issues involved in moving towards greater exchange rate flexibility and capital account liberalization in China. A more flexible exchange rate regime would allow China to operate a more independent monetary policy, providing a useful buffer against domestic and external shocks. At the same time, weaknesses in China's financial system suggest that capital account liberalization poses significant risks and should be a lower priority in the short term. This paper concludes that greater exchange rate flexibility is in China's own interest and that, along with a more stable and robust financial system, it should be regarded as a prerequisite for undertaking a substantial liberalization of the capital account. |
