Pegged Exchange Rate Regime For China's Monetary Policy

Recent years witness the obvious conflicts between the fixed foreign exchange regimes and monetary policy, which results from the cost of the pegged exchange regime because of the imperfection of the coming-into-being mechanism of RMB's exchange rate.With related theory and evidence, the author makes a qualitative and quantitative analysis into this issue on the basis of monetary frame. From the view of the relation between foreign currency based money and basic money, with the Talor rule under pegged foreign exchange regime, and with the Granger causal relation test, this paper respectively make an convincing analysis into the impact on monetary object, on the transmission mechanism of money and on the independence of China's monetary policy. Meanwhile the paper gives reasonable reasons for the above impacts.To close the work, the paper makes its conclusion and put forward its suggestion of how to carry out stable and positive reforms of the exchange regime.