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:
“A fixed image of the future is in the worst sense ahistorical.”
—Juliet Mitchell (b. 1940)
“I cannot say what poetry is; I know that our sufferings and our concentrated joy, our states of plunging far and dark and turning to come back to the world—so that the moment of intense turning seems still and universal—all are here, in a music like the music of our time, like the hero and like the anonymous forgotten; and there is an exchange here in which our lives are met, and created.”
—Muriel Rukeyser (1913–1980)
“We honor motherhood with glowing sentimentality, but we don’t rate it high on the scale of creative occupations.”
—Leontine Young (20th century)
“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)
“Like cellulite creams or hair-loss tonics, capital punishment is one of those panaceas that isn’t. Only it costs a whole lot more.”
—Anna Quindlen (b. 1952)
“Only one thing is certain: if pot is legalized, it won’t be for our benefit but for the authorities’. To have it legalized will also be to lose control of it.”
—Germaine Greer (b. 1939)