Exchange rate system

{}Posted in2023/2/24 19:36:24 | 9Browse

Exchange rebatesforexbroker forexrebatecomm bestforexrebatecompanysion also known as best forex rebate company rate arrangement (ExchangeRateArrangement): refers to a series of arrangements or provisions made by a countrys monetary authorities on the exchange rate system the basic way of exchange rate changes cashback forex the country traditionally, according to the magnitude of exchange rate changes, the exchange rate system is divided into two major types: fixed exchange rate system fxrebatecentral floating exchange rate system fixed exchange rate system ( fixedexchangeratesystem (fixedexchangeratesystem) refers to the local currency itself or the legal gold content as the benchmark for determining the exchange rate, the exchange rate is relatively stable a kind of exchange rate system in different currency system has different fixed exchange rate system floating exchange rate system (floatingexchangeratesystem) refers to a country does not specify the local currency and the foreign currency gold parity and exchange rate fluctuations up and down the boundary, the monetary authority also no longer bear the obligation to maintain the exchange rate fluctuation boundary, the exchange rate with the foreign exchange market supply and demand changes and free up and down a kind of exchange rate system exchange rate system also known as exchange rate arrangement (ExchangeRateArrangement): refers to a countrys monetary authorities on the exchange rate system of the countrys exchange rate changes Traditionally, according to the magnitude of exchange rate changes, the exchange rate system is divided into two main types: fixed exchange rate system and floating exchange rate system The content of the exchange rate system: 1. determine the principle and basis of the exchange rate for example, based on the value of the currency itself, or based on the value of the legal representative, etc. 2. maintain and adjust the exchange rate For example, whether to use open statutory appreciation or depreciation, or to take the floating or limited official intervention approach; 3. the laws, institutions and policies that govern the exchange rate, such as the provisions of the exchange rate and its scope of application in national exchange controls.4. the institutions that set, maintain and manage the exchange rate, such as the Bureau of Foreign Exchange, the Foreign Exchange Equalization Fund Committee, etc. The study of the exchange rate system Including two basic perspectives: how the exchange rate system is formed and decided? How to choose the exchange rate system? The former is an empirical problem, the latter belongs to the normative analysis fixed exchange rate system and its characteristics fixedexchangeratesystem refers to the local currency itself or the legal gold content as the benchmark for determining the exchange rate, the exchange rate is more stable a kind of exchange rate system in different monetary systems have different fixed exchange rate system gold standard system under the fixed exchange rate system characteristics: is a kind of international monetary system centered on the U.S. dollar the systems exchange rate system arrangements, is pegged exchange rate system (1) gold becomes the two countries exchange rate decision of the real material basis (2) the exchange rate only in the mint parity up and down each 6‰ around fluctuations, the magnitude is very small (3) the exchange rate stability is automatic rather than relying on artificial measures to maintain the fixed exchange rate system under the Bretton Woods system the basic content (1) the implementation of the double peg, that is, the dollar is pegged to gold, other national currencies are pegged to the dollar (2) on the basis of the double peg, the International Monetary Fund Association stipulates that the exchange rate of national currencies against the dollar can generally only be in exchange rate parity-1% range of fluctuations, countries must cooperate with the IMF and take appropriate measures to ensure that exchange rate fluctuations do not exceed the limit Because this exchange rate system to implement the double peg, the volatility is very small, and can be properly adjusted, so the system is also known as the dollar-centric fixed exchange rate system, or adjustable peg exchange rate system ( adjustablepegsystem) characteristics (1) the basis for the determination of the exchange rate is the gold parity, but the issuance of currency is not related to gold; (2) the fluctuations are small, but still exceed the upper and lower limits set by the gold transport point; (3) the exchange rate does not have automatic stabilization mechanism, the fluctuations and volatility of the exchange rate need to be artificial policy to maintain; (4) the central bank through indirect means rather than direct control to stabilize the exchange rate; (5) as long as necessary, the exchange rate parity and exchange rate fluctuations can change the boundaries, but the changes are limited role adjustable pegged exchange rate system in general, in the focus on coordination, supervision of countries foreign economies, especially exchange rate policy and balance of payments adjustment, to avoid a devaluation race similar to that of the 1930s, played a positive role in the economic growth and stability of countries in the postwar period flaws (1) exchange rate changes due to inelasticity, so its regulation of the balance of payments is quite limited (2) caused destructive speculation (3) the United States was overwhelmed and the dual-pegged basis by the impact floating exchange rate system and its characteristics floating exchange rate system (floatingexchangeratesystem) refers to a country does not specify the gold parity of the local currency and foreign currency and exchange rate fluctuations up and down the boundary, the monetary authorities also no longer bear the obligation to maintain the boundaries of exchange rate fluctuations, the exchange rate with the foreign exchange market supply and demand changes and the freedom to float up and down a The exchange rate system The system has existed for a long time in history, but it really became popular after the collapse of the dollar-centered fixed exchange rate system in 1972. The classification of exchange rate systems I. The development of the classification of exchange rate systems In the early days of the Bretton Woods system, it was difficult for member countries to find a parity consistent with their balance of payments equilibrium, and the readjustment of the parity that accompanied the currency crisis, which began the enduring debate over fixed and floating exchange rates Traditionally, the classification of exchange rate systems has been bifurcated. Fixed and floating (or flexible) exchange rates, which is also the simplest classification of exchange rate regimes but the degree of fixing or floating is difficult to grasp and there are numerous intermediate exchange rate regimes between fixed or floating exchange rates In the early 1990s, two approaches were applied to the de facto classification of exchange rate regimes: one approach was to analyze central bank interventions through changes in official reserves and interest rates (Popper, 1994); the other method is to analyze the results of exchange rate policy empirically by examining changes in exchange rate parity (Frankel, 1993) The methods of classifying exchange rate regimes after the date of the RR classification, in addition to the RR classification, have been the application and extension of these two classifications The most fundamental issue in the classification of exchange rate regimes is based on which exchange rate to classify The existing literature on the classification of the exchange rate system, there are generally two methods: one is based on the de facto (defacto) classification; the other is based on the countries publicly declared on the statutory (dejure) classification As these two classifications are based on the official exchange rate classification, so this induction has limitations, should be further expanded from the core of economics a proposition of market regulation or State intervention, the most fundamental starting point should be based on the market exchange rate or based on the official exchange rate to classify two, seven major exchange rate system classification (a) IMFs classification in the Bretton Woods era, the IMF exchange rate system is simply divided into pegged exchange rate system and other; and after the collapse of the Bretton Woods system IMF is constantly refining the classification of exchange rate system IMF The original classification of the exchange rate system of each member country is mainly based on the publicly declared exchange rate system of each member country; however, the classification of the exchange rate system purely relying on the declared exchange rate system of each member country has the limitation that the factual practice and official claims often do not match IMF in 1997 and 1999 respectively on the classification method based on the official claims of the exchange rate system was revised, its 1999 classification are: (1) exchange rate arrangements without an independent legal tender, mainly dollarized and currency union exchange rates; (2) currency board exchange rates; (3) traditional pegged exchange rates; (4) pegged exchange rates with volatility; (5) crawling pegged exchange rates; (6) crawling pegged exchange rates with volatility; nbsp;(7) managed floating exchange rates; (8) fully floating exchange rates (ii) Ghosh, Guide, Ostry and Wolfs classification (GGOW classification) Ghosh et al. (1997) argue that the factual and statutory classifications have their own advantages and disadvantages, and they try to combine the two classifications but in practice, they mainly use The GGOW classification has two types of classification: one is a three-dimensional approach, i.e., pegged, intermediate, and floating exchange rate systems; the other is a more detailed nine-dimensional approach, i.e., pegged exchange rate systems include pegs to a single currency, pegs to the SDR, and pegs to other publicly available currencies. pegged SDR, other overt basket pegs and covert basket pegs, intermediate exchange rate systems include currency cooperative system exchange rates, unclassified floating exchange rates and floating exchange rates within a predetermined range, and floating exchange rate systems include floating exchange rates without a predetermined range and purely floating exchange rates Ghosh et al. do not provide a specific classification of exchange rate regimes for each country, and their main purpose is to test the relationship between exchange rate regimes and macroeconomic performance The relationship between (iii) Frankels classification Frankel (1999) argues that the exchange rate regime is a continuum from the most rigid to the most flexible exchange rate arrangements in the following order: currency union exchange rate (including dollarized exchange rate), currency board exchange rate, real fixed exchange rate, adjustable pegged exchange rate, crawling pegged exchange rate, basket pegged exchange rate, target area or target band exchange rate, managed floating exchange rate, and free floating exchange rate Subsequently, Frankel (2003) has adjusted and refined the classification of exchange rate regimes, according to the usual trichotomy from the most flexible to the most rigid exchange rate arrangements in order: (1) floating exchange rates, including both free floating exchange rates and managed floating exchange rates; (2) intermediate regime exchange rates, including target zone or target band exchange rate (subdivided into two types of Bergsten-Williamson target zone and Krugmen-ERM target zone), crawling pegs (subdivided into indexed pegs and pre-stated crawling), basket pegs and adjustable pegs; (3) strictly fixed, including currency board exchange rates, dollarized exchange rates (or euroized exchange rates) and currency union exchange rates three categories Frankel believes that the dividing line between intermediate regime and floating lies in whether the central banks foreign exchange intervention has a clear objective central bank although occasionally intervene in the foreign exchange market, but does not state any objective of the country should be classified as floating strictly fixed and intermediate regime dividing line lies in whether there is an institutional commitment to a fixed exchange rate; if there is, it is strictly fixed but Frankels classification is only a modification and a theoretical description of the IMF classification and does not have detailed criteria for its own classification, let alone a specific classification of countries exchange rate regimes based on it According to Frankel, the theory of the disappearance of intermediate exchange rate regimes (or the hollow theory) and the idea that there will be fewer and fewer currencies in the world are completely untenable Frankel argues that the world currency pool is similar to Markovian static equilibrium process, where independent currencies are always created, disappear, or switch between exchange rate regimes, but the pool remains largely stable

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