The formation of bank foreign exchange quotation is closely related to the management of exchange rate floating range in the inter-bank foreign exchange market, the arrangement of bank foreign exchange settlement and sale system and the management of bank foreign exchange settlement and sale turnover position, which are the key contents of RMB exchange rate system arrangement. Since 1994, China has been implementing a single and managed floating exchange rate system based on market supply and demand. This system is embodied in the formation of bank foreign exchange quotations: the middle prices of several major currencies, such as US dollars and Japanese yen, are obtained by the weighted average of transaction prices in the inter-bank foreign exchange market, which is based on market supply and demand; The weighted average transaction price is the only benchmark exchange rate in China, which embodies the "single" attribute; In order to balance the supply and demand of foreign exchange and keep the exchange rate basically stable, the central bank often needs to intervene in the market, so the RMB exchange rate is "managed"; The inter-bank foreign exchange market and the exchange rate between customers and banks have a certain fluctuation range, which shows that the exchange rate is not completely fixed, but has a certain "floating" range.

Customers handle foreign exchange settlement and sale business in designated foreign exchange banks, which increases or decreases the foreign exchange position of banks. If the foreign exchange position of the head office of a commercial bank exceeds the foreign exchange turnover position limit approved by the foreign exchange bureau, the commercial bank will enter the foreign exchange trading center to sell (surplus foreign exchange) or buy (shortage foreign exchange), and the trading center will arrange various transactions. Because the number of transactions of commercial banks is limited by the turnover position limit of foreign exchange settlement and sale, there will be a mismatch between the number of transactions and the transaction currency in the market, which will lead to the imbalance between supply and demand of transactions in different currencies. Because the number of transactions is strictly limited, the price (in this case, the exchange rate) cannot completely adjust the relationship between supply and demand. In addition, the exchange rate of RMB against the US dollar has remained basically unchanged in the past five years, and China's balance of payments has shown a "double surplus" pattern in most years. Therefore, the central bank must intervene in the market and conduct counterparty transactions with other members of the market in order to realize the "clearing" of the market on the basis of stable prices. The central bank weighted the transaction prices of four currencies, namely USD, EUR, JPY and HKD, in the inter-bank foreign exchange market on that day, and calculated the middle prices of these currencies on the next day. The middle prices of other currencies were calculated by the designated foreign exchange banks according to the middle prices of USD transactions and combined with the international foreign exchange market. Then, on the basis of the middle price, each foreign exchange designated independently sets the foreign exchange buying price, foreign exchange selling price, cash buying price and cash selling price for the next day within the range of exchange rate fluctuation stipulated by the central bank, and lists them to the outside world.