Thursday, June 02, 2005


The conditions for China joining the G8

"China would be asked to accept the responsibilities that go with full membership of the global monetary system, above all full co-operation in the management of a global system of floating exchange rates." (See May 19, below)

"Research by the UK media into 'Black Wednesday' is providing compelling reasons for rethinking the international financial architecture. Floating or fixed exchange rates? . . But returning to fixed exchange rates means that national governments would have to comply with monetary discipline, if they want to take part in the global economy." (February 10)

China (and others) are unlikely to want a system of floating exchange rates. See elsewhere in the blogosphere. Blog. (China's Dollar Peg, April 18)

"The Chinese have an exceedingly clear recollection of the great Asian financial crisis of 1997 that devastated Thailand and Indonesia among others. China escaped it, because it had not opened its fragile financial markets to fickle, easily-repatriated foreign capital. The lesson learned: if the RMB floats, it will be a managed float, with enough liquidity and transaction restrictions to ensure that the Chinese government will be able to control the rate in times of need."

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