Reforms in Exchange Rate System and Capital Market

SEMINARIO
Las relaciones económicas
de China con América Latina
y el Caribe:
Una visión prospectiva
11 de noviembre de 2015
j
Reforms in Exchange Rate System
and Capital Market Liberalization In
China
Jiandong Ju, Shanghai University of Finance and
Economics
Seminar “The Economic Relations between
China and Latin America and the Caribbean: A
prospective Vision”
The Issue
• Independent Monetary Policy
• Fixed exchange rate
• Capital market openness
• Trilemma of reforms:
– Financial sector reform
– Exchange rate system reform
– Capital market openness
• Direction of Reforms:
–
–
–
–
Financial sector reform
Floating exchange rate system
Capital market openness
Sequence?
Current Reforms
• Financial sector reforms
– Interest rate marketization
• Exchange rate reforms
– 8/11 depreciation
• Capital market openness
– 40 items in Shanghai Free Trade Zone
Current Risk Control
• 2Q risk control
– Qualified account
• Free trade (FT account) in Shanghai FTZ
– Quota
Current Sequence
• 1. Capital market liberalization
• 2. Interest rate Liberalization
• 3. Exchange rate floating
Two rules
• Marketization in international financial system
• Control systematic risk to prevent financial
crisis
Our suggestion
• Non-linear capital flow tax