China's Exchange Rate Policy And Monetary Policy Coordination Under The Open Economy

Commencing from theory study, this thesis proposes the mode of financial development in our country by analyzing the theory of"Trilemma of the Exchange Rate Regime"in current economic situation. According to the economic situation of our country, the mode of financial development of our country is the mode of restrictions on capital flow and restrictions on exchange float in the situation of relative independence in monetary policy.From the point of view in the coordination between exchange rate policy and monetary policy, the reasons of Argentina financial crisis and Southeast Asia financial crisis are fixed exchange rate system, too quick process of financial liberalism and losing independence of monetary policy. In the process of concluding the similarities of these two financial crisis and the contrast with opening capital account successfully in Chile, we may conclude that we should keep the independence of monetary policy, choose the reasonable exchange rate system and open the financial market cautiously to meet the needs of the opening financial industry in the situation of acceleration in capital flow.Since the successful reform in exchange rate in 1994, there are three conflicts between exchange rate policy and monetary policy in our country. We can make the conclusion that the bottleneck of the conflict from 1994 to 1996 is forming in the process of the evidential study on these three conflicts. From the point of conducting mechanism, the main reason of the conflicts between exchange rate policy and monetary policy is the failure in conducting mechanism between exchange rate and interest rate. From the point of system, the main reason of the conflicts between exchange rate policy and monetary policy is the inside conflicts between exchange rate system and the supplement of money.Exchange rate policy and monetary policy are all the important parts of financial policy for one country. Promoting the coordination between exchange rate policy and monetary policy are not only the guarantee of normal operation on macro economy, but also the key to keep economy balance on inside and outside after opening capital account conditionally. Applying exchange rate policy and monetary policy to achieve different goals is more difficult, the problem in the coordination between exchange rate policy and monetary policy shouldn't be neglected, the importance of coordination the conflicts between exchange rate policy and monetary policy become more outstanding. We should make the tools of monetary policy more useful, perfect the exchange rate forming mechanism, and make the process of interest rate market--oriented to promote the economy balance on inside and outside.