On the Necessity of Establishing a Flexible RMB Exchange Rate Mechanism

The RMB exchange rate system should be a controlled floating rate, but it is never one in its true sense. This is attributed to the adaptation of the settlement system of exchange, the limitation of circular fund of foreign exchange bank, the exchange rate system with US Dollar as the basis and the stable exchange rate policy. Therefore, the system we have now is not in line with the requirements of WTO, and can be rectified by deepening the foreign exchange system restructuring, improving the foreign exchange market, changing the formulating method of exchange rate,and establishing the RMB exchange rate mechanism which is suited to WTO. [