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:
“Indeed, I thought, slipping the silver into my purse ... what a change of temper a fixed income will bring about. No force in the world can take from me my five hundred pounds. Food, house and clothing are mine for ever. Therefore not merely do effort and labour cease, but also hatred and bitterness. I need not hate any man; he cannot hurt me. I need not flatter any man; he has nothing to give me.”
—Virginia Woolf (1882–1941)
“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)
“Strange that the vanity which accompanies beauty—excusable, perhaps, when there is such great beauty, or at any rate understandable—should persist after the beauty was gone.”
—Mary A. [Elizabeth, Countess Von] Arnim (1866–1941)
“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)
“Capital is money, capital is commodities.... By virtue of it being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.”
—Karl Marx (1818–1883)
“The general fact is that the most effective way of utilizing human energy is through an organized rivalry, which by specialization and social control is, at the same time, organized co-operation.”
—Charles Horton Cooley (1864–1929)