First of all, let me introduce the background: On July 21, 2005, the People's Bank of China announced that my country will begin to implement a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies.

This issue is complicated in detail. My personal views are for reference only. I think a macro floating interest rate should be adopted.

1. If it is a domestic demand-oriented country and has no external dependence, then it is certainly better to fix the exchange rate. The era of planned economy is gone forever. In today's globalized world, no one can live without anyone else, and no one can exist alone in isolation. China is a big country that relies on exports. It has a perennial trade surplus and fixed interest rates put great pressure on appreciation. The central bank can only maintain a relatively fixed currency exchange rate by constantly buying enough foreign exchange in U.S. dollars. Such large foreign exchange balances are not fully utilized, resulting in a large waste of capital. Because inflation always exists, the central bank will buy U.S. bonds and invest in U.S. funds and stocks. The U.S. dollar is worthless. What’s the difference between taking more and taking Japanese yen? China currently holds nearly 600 billion U.S. dollars in U.S. treasury bonds, becoming the primary creditor country. The U.S. subprime debt crisis has also involved China. It feels very wronged. Assets shrank dramatically in an instant. What does the host think?

2 The central bank’s fixed exchange rate makes the currency vulnerable to attacks. When hot money flows in, in order to maintain the established exchange rate target of the RMB and the US dollar, the central bank must absorb “excess” foreign exchange market funds by issuing local currency; this This creates a situation or possibility of continued expansion of the domestic money supply and thus leading to future inflation. In the face of rising domestic inflation, concerns about exchange rate targets may constrain the central bank's interest rate policy operations, making it difficult to significantly increase interest rates in line with the needs of the domestic economic situation. This is mainly because if interest rates in the international market fall at the same time, raising domestic interest rates is likely to attract more international capital inflows, thereby causing further upward pressure on the RMB exchange rate.

3. An appropriately floating currency exchange rate should be adopted. The United States of America has been sacrificed in 2008. China used to focus solely on the US dollar strategy. When the US dollar appreciates in the international currency market, the international value of the RMB rises; when the US dollar depreciates in the international currency market, the international value of the RMB. Then it dropped. In order to reduce currency risks, China has paid more attention to the currencies of developed countries such as the yen and the euro. China should establish a diversified monetary policy, put eggs into different baskets, and reduce monetary factors caused by regional politics and industrial factors. Connect the RMB with the world’s most stable countries. We do not need to pay for the United States. We should develop our own sovereign economy and diversify our debt investments, especially investing in the real economy and purchasing foreign technology. Money printing machines can work smoothly, but people cannot and cannot become slaves of Western countries. A fixed exchange rate is like if others jump off a building, we will follow suit and we will suffer a lot.