Conquering the Summit With Firm Strides —— Review on the restarted RMB exchange rate reform

On the evening of June 19th 2010, the central bank Of China released that on further advancing the reform in RMB exchange rate formation mechanism and strengthening the flexibility of RMB rate＂. There were three key points. First, ＂now that global economy is steadily recovering, and the recovering trend in China is strengthened, it is necessary to further advance reform in RMB exchange rate formation mechanism,

Volatility of the Exchange Rate after Renminbi Inclusion into the SDR：Test of Stability and Representation

The special drawing rights(SDR) must have stability and representation in order to serve as reserve assets and the unit of account for bulk commodities and assume the function as a potential international currency. By introducing such factors as China's share in global trade volume in 2013, this paper found that the covariance between the SDR and the price fluctuations of major commodities is the smallest after Renminbi inclusion into the SDR. The covariance is more or less halved compared with the SDR without Renminbi. Then, based on our comparison of volatility in the effective exchange rates(EER) of various countries(extensively used) and the volatility in the SDR exchange rate(seldom used), we found that despite similar trend curves, the SDR's volatility can explain for a very small part of the volatility in effective exchange rate. The residual error indicates that the share of SDR is limited in the volatility of effective exchange rates of various countries on the one hand and suggests that it is urgent to expand the SDR to include representative currencies, particularly the currencies that represent significant weights of world trade. Relevant tests demonstrate that Renminbi inclusion into the SDR will not only enlarge the stability of SDR but enlarge its function as an index currency through the extension of SDR's function as the unit of account for major world commodities and the inclusion of the currencies of other major trading nations, so that the representation as the global unit of account will be enlarged. In addition, the inclusion into the SDR also helps Renminbi become a component of the international reserve currencies and supplement its liquidity supply.

Exchange Rate Volatility,Heterogeneous Firms and Market Concentration

With the gradual promotion of market-oriented reform of the RMB exchange rate,the fluctuation range of the RMB exchange rate is increasing.How to deal with the impact of exchange rate volatility on Chinese exports is an important challenge faced by China.This paper finds that although exchange rate volatility,as a whole,has a negative impact on exports,high-productivity exporters are less prone to exchange rate volatility shock in both intensive and extensive margins.As high-productivity firms are less affected by exchange rate risk,they account for larger market shares.This paper,from a new perspective,provides evidence that increasing productivity helps mitigate the negative impact of exchange volatility on exports.