The current RMB exchange rate system is the best choice for this exchange rate system reform, and the characteristics of other intermediate exchange rate systems determine that they cannot be the object of this exchange rate reform. The next direction of exchange rate reform should be floating exchange rate system. According to the classification of the International Monetary Fund (1999), the exchange rate systems of member countries can be divided into eight categories (see table 1). Before the reform of exchange rate system, China implemented the third category, that is, pegged to the US dollar system. After the reform, the exchange rate system takes into account the characteristics of the third and seventh categories. First, the understanding of the current exchange rate system is based on market supply and demand. Compared with the original exchange rate system, the managed floating exchange rate system with reference to a basket of currencies has three changes in form: one is the marketization of exchange rate formation mechanism; The second is to choose the adjustment method of referring to a basket of currencies instead of the original adjustment method of single peg to the dollar; Third, choose a managed floating exchange rate system to replace the original fixed exchange rate system. It not only absorbs the advantages of pegged to a basket of currencies and managed floating exchange rate system, but also abandons the shortcomings of the two exchange rate systems. Theoretically speaking, it is the best choice for RMB to move towards regional currency, but whether it can be as perfect as the theoretical assumption in practice remains to be tested. 1. It is better to refer to a basket of currencies than to peg to a single currency. (1) From the perspective of trade diversification, although the United States is an important trading partner of China, it only accounts for 1/6, slightly lower than Japan and the European Union, while China's trade with Asia accounts for 57%. Therefore, we should refer to a basket of currencies of all major trading countries, not just pegged to the US dollar. In addition, referring to a basket of currencies will encourage people to reduce their settlement in US dollars, which will help RMB become the settlement unit and currency of international trade in Asia in the long run. (2) From the perspective of reducing endogenous transaction costs, China should choose the currencies of countries with close economic ties as the reference target of RMB exchange rate. A single dollar peg means that China's monetary policy is subject to the United States to a certain extent. However, due to the huge differences in economic conditions and policy tendencies between China and the United States, a single dollar peg will have an impact on the effectiveness of China's monetary policy. In recent years, the trade volume between China and the European Union, Japan and the United States accounted for almost the same proportion of China's total trade volume, and the investment of the European Union and Japan in China was not inferior to that of the United States. Therefore, taking a basket of currencies as a reference object is more suitable for China's foreign trade and economic cooperation. (3) From the perspective of satisfying the export competitiveness of RMB exchange rate policy, the export competitiveness of RMB exchange rate policy aims at stabilizing the international competitiveness of exports and the import cost. The outstanding advantage of referring to a basket of currencies is to stabilize the nominal trade-weighted exchange rate of RMB (if the weights are distributed among currencies according to the proportion of trade). If there is no serious inflation difference between China and its major trading partners, the reference to a basket of currencies also ensures the stability of the real trade-weighted exchange rate. 2. The managed floating exchange rate system is superior to the original fixed exchange rate system. (1) From the perspective of the managed floating exchange rate system itself, it has some advantages of the fixed exchange rate system and can maintain the flexibility of the exchange rate. Under the managed floating exchange rate system, on the one hand, the exchange rate is adjusted with the change of supply and demand in the foreign exchange market, which can play a regulatory role in the economy to a certain extent; On the other hand, the monetary authorities can intervene and manage the exchange rate more, so as to maintain the stability of the domestic currency exchange rate and avoid the impact of the violent fluctuation of the domestic currency exchange rate on the domestic economy. (2) According to the national conditions of China, China, as a developing country, has the following basic advantages in choosing a managed floating exchange rate system: ① Ensuring the independence of domestic monetary policy. Although the role of China's monetary policy in stimulating or tightening the economy is questioned by the theoretical circle and challenged by the actual effect, the role of using forward-looking fine-tuning of monetary policy to stabilize economic fluctuations has been generally recognized in developed countries. Therefore, it is still of great significance for China, a large developing country with its domestic market as the mainstay, to use monetary policy rationally. ② Flexibility in adjusting the balance of payments. This price adjustment can reduce the impact of the unfavorable international environment on the domestic economy. (3) prevent speculative shocks. In the 1990s, frequent currency speculation shocks caused extremely serious damage to countries with open capital and fixed exchange rate systems. This lesson is very important for China to gradually open its capital market in the future. The current exchange rate system is not perfect. (1) Reference to a basket of currencies means that the RMB will no longer be directly linked to the US dollar. Since all the currencies we are referring to are floating exchange rate systems, the frequency and range of bilateral nominal exchange rate changes of RMB against the US dollar will increase, which will bring exchange rate risks to foreign trade and investment. (2) It is difficult to fully consider any of the three policy objectives of RMB exchange rate: financial security, export competitiveness and internal and external balance. However, the important role of foreign trade in China's economy and the imperfect development of China's domestic market economy system require that the current exchange rate policy should be focused. (3) Can not give full play to the role of exchange rate adjustment. Because the monetary authorities manage the fluctuation of exchange rate, the range of exchange rate fluctuation is limited, and the exchange rate cannot fully reflect the supply and demand situation of the foreign exchange market, so it is difficult to effectively regulate commodity trading and capital flow. It may also lead to suspicion of manipulating the exchange rate and easily lead to trade disputes. Through the above analysis, the author thinks that the managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies is only the phased orientation of RMB exchange rate system reform, and it should be adjusted again after RMB has the function of regional currency.