Foreign Exchange Instructions: Rate And System Fifth Exchange Rate System

< p > < a > href= > http://sjfzxm.com/news/index_c.asp > world > /a > the monetary system can be divided into three categories by using different exchange rate systems: gold standard, fixed exchange rate and floating exchange rate system. These exchange rate systems are basically developed according to the procedures of financial history.

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< p > < strong > 1. The classical gold standard system and its pition to banknote system < /strong > /p >

During the period of P > 1880-1913, the gold standard occupied the dominant position in its purest form. Most countries' currencies were linked to gold, thus establishing the exchange rate system based on the gold standard.

Gold is the most ideal currency in the world because of its fine characteristics that other currencies do not have: uniform texture, less wear, less quantity and higher value.

Under the gold standard, all countries make their own gold coins. When people buy goods abroad, they only pay the same gold value as the value of the commodity.

At this time, there is a fixed exchange rate between currencies, and the exchange rate is determined by the amount of gold in each country's currency.

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< p > with the development of the economy, people find that gold is not convenient to carry as payment means, so governments begin to gradually change to using credit money, but they still use gold as the standard currency, resulting in the reduction of most countries' gold reserves.

As a result, the gold standard has entered a new stage of development, namely the gold block standard and the gold exchange standard stage.

However, people find that the two systems are very unstable.

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After the outbreak of the P 1929-1933 economic crisis, the gold standard system and the gold exchange standard system could not be maintained.

On this basis, the main developed countries have linked some countries with close trade and finance and foreign colonies to form currency blocs and establish their internal exchange rate system.

The main currency groups are the pound group, the dollar group and the franc bloc, which makes the world's foreign exchange activities mainly concentrated between the pound, the franc and the US dollar, making foreign exchange pactions advantageous to these big powers.

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< p > but this system did not last long. The exclusiveness of monetary blocs and the prevalence of trade protectionism caused the confusion of international financial order, which made the paper currency standard soon quit the international stage, and the Bretton Woods system and fixed exchange rate system replaced it.

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< p > < strong > two, Bretton Woods system and fixed exchange rate system < /strong > /p >

After the Second World War, because the United States was far away from the war zone, its financial strength and gold reserves were the number one in the world. So the United States urgently wanted to establish a unified currency exchange rate system, so as to facilitate the circulation and settlement of foreign exchange. P

At the same time, the economic and social upheaval in 30s also impressed the world. So economists and political scientists are determined to establish a new exchange rate system to avoid economic chaos and reduce the impact of the great depression.

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Under this background, in July 1944, representatives of 45 countries, including the United States, Britain, the Soviet Union and France, held the "joint and League countries' international monetary and financial conference" in Bretton Woods village, New Hampshire, also known as the Bretton Woods conference, P.

The meeting finally decided that the US dollar would be directly linked to gold, and other currencies would make an established parity with the US dollar.

On the one hand, this system has promoted the development of the world economy, and on the other hand, it has led to a relative decline in the economic status of the United States, and the deficit in the balance of payments has been increasing.

In August 1971, President Nixon cut off the link between us dollar and gold and ended the Bretton Woods system.

Since then, the world has entered the era of floating exchange rate.

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< p > strong > three, the contemporary foreign exchange market and its floating exchange rate system < /strong > < /p >

The emergence of the floating exchange rate system (P) is entirely natural.

Floating exchange rate system means that the price of a country's currency does not stipulate the fluctuation of the fluctuation. Foreign exchange rate is mainly determined by the market power of supply and demand.

The floating exchange rate system can be divided into two types: free floating exchange rate and managed floating exchange rate. The difference lies in whether there is government intervention.

Nowadays, most countries have managed floating systems.

Although there are still many disadvantages in the floating exchange rate system, in any case, the new exchange rate system in the foreign exchange market has been established and is still being perfected.

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< p > < strong > according to the currencies that are pegged, the floating exchange rate system can be divided into: < /strong > /p >

< p > strong > 1, and peg to single currency floating < /strong > /p >

< p > peg to a single currency floating means linking domestic currencies to a foreign currency.

Countries adopting this exchange rate floating mode have established close trade and financial relations with the United States and France due to economic, historical and geographical reasons. In order to keep these relations developing steadily and avoid the adverse effects of frequent fluctuations in bilateral exchange rates, these countries will peg their currencies to the single currency, such as the US dollar or French franc.

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< p > strong > 2, and peg to a basket of currencies floating < /strong > /p >

< p > peg to a basket of currencies floating refers to linking domestic currencies to a basket of currencies.

This peg pattern can be divided into two parts: first, directly pegging the SDR to the local currency, the advantage is simple and easy to maintain, and the relative stability of the exchange rate can be maintained; the disadvantage is that the US dollar is in the proportion of 40% of the special drawing rights, and the SDR is largely pegged to the US dollar; the two is to peg its currency to a blue coin designed by its own country, and the currency in the blue coin is made up of the currencies that are most closely related to the national economy. The weights of various currencies are usually determined by the share of the main trading partners in the total foreign trade volume of the country or by the composition of the currencies of their foreign trade.

Pegging a basket of currencies is relatively stable, and the fluctuation of exchange rate is relatively small.

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< p > < strong > the meaning of SDR < /strong > /p >

< p > special drawing rights are valued in accordance with the value and weight of the five currencies of the US dollar, German Mark, French franc, Japanese yen and sterling, which are essentially the same as "a basket of currencies".

Its currency is relatively stable and can be used for intergovernmental settlement or exchange of foreign exchange with other Member States to make up for the balance of payments deficit.

The European monetary unit is a monetary system based on the proportion of the nine currencies of the European economic community. It is used as a bookkeeping unit within the community. Its member states are obliged to intervene in the foreign exchange market and maintain a relatively fixed exchange rate system (adjusted every five years). The currency value is also relatively stable. Although no cash is available in the market, it has become an international settlement currency.

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< p > < strong > Hongkong linked exchange rate system < /strong > /p >

< p > Hongkong successfully implemented the linked exchange rate system in 1983.

Since October 17, 1983, the Hongkong note issuing bank has exchanged $7.8 for the exchange rate of US $1, and has paid the US dollar in advance to the exchange fund before issuing the Hong Kong dollar certificate of indebtedness.

At the same time, the government also promised that after the return of Hong Kong dollar cash from circulation, the note issuing bank could also use the price back to the US dollar.

After the implementation of the linked exchange rate system, maintaining a stable exchange rate has become the sole objective of Hongkong's monetary policy.

Since its inception, the system of cooperation and good fortune has been for many years, so that Hongkong has avoided the Asian currency devaluation crisis, and has brought short-term and medium-term prosperity to Hongkong's economy.

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< p > < strong > China's exchange rate management system < /strong > /p >

< p > since July 21, 2005, China has begun to implement a regulated floating exchange rate system based on market supply and demand and reference to a basket of currencies.

That is, the RMB exchange rate no longer focuses on the single dollar, but refers to a basket of currencies and fluctuated according to market supply and demand.

Here, the "basket of currencies" refers to the selection of several major currencies according to the actual situation of China's foreign economic development, giving the corresponding weight to form a basket of currencies.

At the same time, according to the domestic and international economic and financial situation, based on market supply and demand, referring to a basket of currencies to calculate the change of the RMB multilateral exchange rate index, we should manage and regulate the RMB exchange rate, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

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< p > the currency composition in the basket takes into account the major countries, regions and currencies that account for a large proportion of China's foreign trade, foreign debt and foreign direct investment activities.

Reference to a basket shows that the exchange rate changes between foreign currencies will affect the RMB exchange rate, but reference to a basket of currencies is not equal to a basket of currencies, it also needs to market supply and demand as another important basis, thus forming a managed floating exchange rate.

The system will help to increase exchange rate flexibility, curb unilateral speculation and maintain multilateral exchange rates.

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