Research On The Impact Of Central Bank Reform On Real Effective Exchange Rate

The Central Bank of a country is the maker of monetary policy,which plays an important role in the economic development and stability of a country.Since the emergence of the central bank in the 17 th century,the question of what kind of role the central bank should play,accompanied by a series of economic crisis tests,has spawned different theoretical schools.The central banks naturally combined the experience brought by the crisis and explored the reform step by step.With the increasingly close connection of the world economy,the economic communication of all countries in the world is not only limited to the trade,but also in the financial field.Therefore,the monetary policy goal of a country is not limited to the domestic price stability,and the stability of the foreign currency price(exchange rate)is gradually paid attention to.So from this point of view,this paper explores the impact of central bank reform on a country's exchange rate.Firstly,this paper explains the relevant theories of monetary policy.From the perspective of New Keynesian theory,it expounds the transmission intermediate variables of monetary policy and the effectiveness of monetary policy.It shows that the central bank's monetary policy can choose the transmission intermediate variables to regulate and control the economy,while the transmission intermediate variables include interest rate and exchange rate.Then,this paper expounds the specific indicators of the reform of the central bank,that is,the reform of the central bank is carried out from the independence and transparency of the central bank.The independence of the central bank can protect the central bank from the pressure from the government,and the transparency of the central bank can make the communication between the central bank and the market more smooth and credible.By constructing the independence and transparency indicators of the central bank,we can have an overall understanding of the specific situation of the Central Bank of the sample countries selected in this paper.Then choose the appropriate exchange rate decision model,this paper chooses the behavioral equilibrium exchange rate model,which focuses on the short-term temporary factors and the long-term basic economic factors,and pays more attention to the actual behavior of the exchange rate under the conditions of some relevant economic variables.The specific way is to embed some variables of the system behavior relationship between the exchange rate and the decision factors in the model,so analyze the exchange rate Rate volatility is more realistic.Finally,this paper uses the sample data of Latin America and East Asia,through empirical analysis,finds that the independence and transparency brought by the reform of the central bank,on the one hand,can make the central bank independently choose the appropriate monetary policy objectives,avoid the interference of the government;on the other hand,can make the central bank obtain the credibility of the market public,and then the central bank guides the market public to make the exchange rate fluctuations more stable.Finally,based on the previous theoretical and empirical analysis,this paper puts forward the following suggestions for the further reform of the Central Bank of China:balancing monetary and fiscal policies,strengthening the independence construction of the central bank;selecting appropriate monetary policy objectives,guiding the price stability at home and abroad;improving the transparency construction of the central bank,increasing the credibility of the central bank's behavior;increasing the communication between the central bank and the market,and actively guiding the exchange rate towards stability Fixed.