Article: The Institutional and structural problems of China's foreign exchange market and implications for the new exchange rate regime.

After briefly reviewing the historical development of China's foreign exchange market, this article examines the structural characteristics of the inter-bank market, describes its current structural problems as well as its institutional constraints and explores the delicate relationship between improving the foreign exchange market structure and reforming the RMB exchange rate regime. The inter-bank market is characterised by lack of market depth, limited transaction types and restricted participation with highly concentrated trading. The compulsory foreign exchange purchase and sales system distorts market supply and demand while the rigid exchange rate regime reduces ...

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