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:
“... social evils are dangerously contagious. The fixed policy of persecution and injustice against a class of women who are weak and defenseless will be necessarily hurtful to the cause of all women.”
—Fannie Barrier Williams (1855–1944)
“Ants are so much like human beings as to be an embarrassment. They farm fungi, raise aphids as livestock, launch armies into war, use chemical sprays to alarm and confuse enemies, capture slaves, engage in child labor, exchange information ceaselessly. They do everything but watch television.”
—Lewis Thomas (b. 1913)
“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)
“Bourgeois existence is the regime of private affairs ... and the family is the rotten, dismal edifice in whose closets and crannies the most ignominious instincts are deposited. Mundane life proclaims the total subjugation of eroticism to privacy.”
—Walter Benjamin (1892–1940)
“Bob, it’s the second night of violence in this normally quiet, yet generally swinging, Casino Capital of the East.”
—John Guare (b. 1938)
“The preservation of life seems to be rather a slogan than a genuine goal of the anti-abortion forces; what they want is control. Control over behavior: power over women. Women in the anti-choice movement want to share in male power over women, and do so by denying their own womanhood, their own rights and responsibilities.”
—Ursula K. Le Guin (b. 1929)