Tsinghua University Overseas China MPA Resource Center Wang Xin

Recently, an important task in China's foreign exchange management field is to improve the managed floating exchange rate system based on market supply and demand, improve the marketization of RMB exchange rate formation, and further play the regulatory role of exchange rate in resource allocation and macro management. The exchange rate system is closely related to the foreign exchange market; The choice of exchange rate system affects the development of foreign exchange market to a great extent, and the development of foreign exchange market affects the operation of exchange rate system. At present, China's foreign exchange market is underdeveloped. In the process of RMB moving towards a floating exchange rate system, it is necessary to greatly improve the depth and breadth of the market and increase liquidity on the basis of strengthening supervision.

First, the main problems and root causes of the inter-bank foreign exchange market

1994 after the reform of the foreign exchange system, China bid farewell to the foreign exchange swap market with strong planned economy and regional division, and formed a unified foreign exchange market throughout the country. The foreign exchange market mainly includes the foreign exchange settlement and sale market between designated foreign exchange banks and enterprises and the interbank market. The latter is based on the national networked foreign exchange trading system managed by China Foreign Exchange Trading Center and is the core of the exchange rate formation mechanism. The central bank participates in the transaction and regulates the exchange rate. Compared with the foreign exchange swap market, the inter-bank market has made a great leap, but there are still many problems that cannot meet the needs of the open market economy.

1. Main problems in the inter-bank foreign exchange market

First, the market transaction volume is small. In 2002, the annual trading volume of the inter-bank foreign exchange market was $9,765,438 +0.9 billion, accounting for only one sixth of the total import and export volume of that year. This is not only incomparable with developed markets, but also far below the level of many small neighboring countries. Taking April 2000 1 year as an example, the average daily trading volume of foreign exchange trading centers was only 1 0.90 billion US dollars, while the Philippines, Malaysia, Thailand and India were1billion US dollars,1billion US dollars, 2 billion US dollars and 3 billion US dollars respectively (BIS, 2002).

Second, the market is highly concentrated. Due to institutional and historical reasons, four wholly state-owned commercial banks, such as Bank of China, accounted for more than 90% of the total transaction volume in the inter-bank foreign exchange market, and the foreign exchange sold by Bank of China in 2002 accounted for more than half of the foreign exchange sold in the market. In addition, under the existing exchange rate formation mechanism, the central bank is a "super trader" in the market and becomes the main counterparty of the Bank of China (explained in detail below). Even if the number of foreign exchange trading entities increases in the future, the monopoly position of one or two big banks in the market may continue to exist, affecting the rational allocation of resources.

Third, the market liquidity is poor. At present, the inter-bank foreign exchange market adopts the bidding mode of quotation matching, and the computer system matches the sale according to the principle of price priority and time priority, and automatically carries out price formation and market liquidation. This method better embodies fairness, justice and price optimization, but the transaction can only be carried out if both buyers and sellers exist at the same time and the buying and selling prices can match. The transaction is not necessarily continuous, the scale is limited, the market liquidity is not high, and the exchange rate may fluctuate greatly.

Fourth, the variety of market transactions is single. At present, the inter-bank foreign exchange market only has spot transactions of RMB against USD, JPY, HKD and EUR, but there are no forward, swap, option and futures transactions. This is fundamentally different from the situation that spot trading is in a secondary position in the international foreign exchange market. 200 1 In the traditional international foreign exchange market, the average forward trading day is $65,438+$031billion, and the average daily foreign exchange swap is $656 billion. In addition, the foreign exchange trading days of OTC derivatives all reached $853 billion. In contrast, the spot foreign exchange trading day is only $387 billion (BIS, 2002).

Fifth, centralized trading and centralized liquidation are costly and risky. At present, traders of designated foreign exchange banks must enter the premises of China Foreign Exchange Trading Center to conduct foreign exchange transactions, and the interbank market has the characteristics of centralization and materiality. This market form is common in the foreign exchange market which is absolutely dominated by the central bank and adopts competitive trading. With the expansion of market scale, the problem of centralized trading will become more and more prominent. For example, the construction and maintenance of trading places need to consume a lot of manpower and material resources, and its capacity is increasingly difficult to meet the increasing demand of trading subjects.

Corresponding to centralized trading, China inter-bank foreign exchange market implements centralized settlement of local and foreign currencies, and China Foreign Exchange Trading Center bears the liquidation risk. In the future, when the convertibility of RMB is improved and RMB moves towards a floating exchange rate system, the number of trading entities and their foreign exchange positions will increase rapidly, and some powerful trading entities may fall into crisis due to credit risk and exchange rate risk. In addition, as China Foreign Exchange Trading Center is a public institution of the People's Bank of China, it bears the liquidation risk. In fact, the People's Bank of China bears risks, which leads to a general lack of risks among market participants and may lead to a large number of high-risk transactions. As a result, the stability of foreign exchange trading centers and the whole market may be greatly affected.

2. The ultra-stable RMB exchange rate has restrained the development of foreign exchange market.

China's inter-bank foreign exchange market is underdeveloped, on the one hand, because the convertibility of RMB is not high, enterprises and individuals can't freely control foreign exchange, and the foreign exchange market lacks real investors and traders; On the other hand, the ultra-stable exchange rate of RMB against the US dollar also inhibits the development of the foreign exchange market.

From 65438 to 0994, China implemented a managed floating exchange rate system based on market supply and demand. Since the Asian financial crisis, the nominal exchange rate of RMB against the US dollar has fluctuated very little, which has a great impact on the development of the foreign exchange market. Under the floating exchange rate system, whether the exchange rate is free floating or managed, the exchange rate is mainly determined by the supply and demand of the foreign exchange market, and the government (central bank) has little intervention in the foreign exchange market, so the exchange rate formation is highly market-oriented. In the case of small exchange rate flexibility, the exchange rate mainly reflects the will of the government, the development of the foreign exchange market is limited, and the marketization of the exchange rate is low. In China, due to the compulsory foreign exchange settlement and sale system and the management of foreign exchange turnover ratio of designated foreign exchange banks, enterprises must sell foreign exchange exceeding the prescribed limit to designated foreign exchange banks, which will sell it in the inter-bank foreign exchange market. In recent years, China's foreign exchange receipts and payments have continued to be in surplus, and the amount of foreign exchange sold by enterprises and designated foreign exchange banks in the foreign exchange market has increased sharply. Because financial institutions, enterprises and individuals are not free to buy and sell foreign exchange, the market supply and demand are seriously unbalanced, and the RMB exchange rate is facing certain appreciation pressure. In order to maintain the stability of the RMB exchange rate against the US dollar, the central bank had to buy a lot of foreign exchange, which led to the continuous increase of foreign exchange reserves. It can be seen that, to a great extent, the central bank is the most important buyer in the foreign exchange market, and its operation directly determines the level of the RMB exchange rate.

Under the extremely stable exchange rate of RMB against the US dollar, the government (central bank) intervened in the market operation too much, which directly led to a series of problems in the above-mentioned foreign exchange market. The function of the foreign exchange market is limited to serving banks to adjust their foreign exchange settlement and sale positions, and various economic entities cannot meet their asset management and risk management needs through the foreign exchange market, so it is difficult to significantly increase the trading entities and trading volume in the market. Because foreign exchange resources are mainly allocated by the government rather than the market mechanism, competitive trading is a relatively simple and direct way of utilization, so there is no need to adopt a dealer system that can improve market liquidity and form real market prices. In addition, the government plays a leading role in the allocation of foreign exchange resources, and is responsible for centralized liquidation accordingly, resulting in centralized liquidation risks. Micro-economic entities do not bear liquidation risk and exchange rate risk, and have no incentive to avoid risks through diversified financial instruments, which restricts the development of forward foreign exchange market. In short, to a great extent, the current inter-bank foreign exchange market is the product of the ultra-stable arrangement of RMB exchange rate and also serves this institutional arrangement. From the international experience, more and more economies are moving towards a floating exchange rate system. [2] In the future, we should improve the RMB exchange rate formation mechanism while keeping the RMB exchange rate basically stable. This requires vigorously developing the foreign exchange market, reducing government intervention and improving the marketization of exchange rate formation.

Two. Policies and measures to promote the development of foreign exchange market

Recently, the State Administration of Foreign Exchange has issued a series of measures aimed at promoting market development. Increase the trading of RMB against Euro; Allow banks and non-bank financial institutions to carry out foreign currency interbank lending; Extend the trading hours in the foreign exchange market; Expand the pilot of China Bank's forward foreign exchange settlement and sale business to other wholly state-owned commercial banks; Significantly increase the upper limit of turnover position of foreign exchange settlement and sale of wholly state-owned commercial banks; Establish a real-time monitoring system for quotations and transactions in the foreign exchange market, and so on. But on the whole, the inter-bank foreign exchange market is far from meeting the requirements of marketization of RMB exchange rate formation mechanism and managed floating exchange rate system. It is predicted that with the improvement of the convertibility of RMB, enterprises and individuals will have more and more freedom to control foreign exchange, and more and more potential participants in the market will lay the foundation for the development of the foreign exchange market. The following are only some policy suggestions to improve the inter-bank foreign exchange market itself.

1. Increase trading subjects and promote fair competition.

First, cultivate more powerful commercial banks. Commercial banks are the main trading entities in the foreign exchange market. Further allow large foreign banks to invest in shares, speed up the reform of shareholding system of Chinese banks, develop foreign exchange business rapidly, change the situation that one or two banks occupy an absolute dominant position in the foreign exchange market and promote fair competition.

The second is to allow more non-bank financial institutions to enter the foreign exchange market. Although the foreign exchange market is usually called the inter-bank market, from the international experience, non-bank financial institutions are playing an increasingly important role in this market. According to the sampling survey of Bank for International Settlements 200 1, compared with 1998, in the traditional foreign exchange market, the proportion of inter-bank transactions has dropped from 64% to 59%, and the transactions between banks and non-financial enterprises have dropped from 17% to 13%. On the contrary, the proportion of transactions between banks and non-bank financial institutions increased from 12% in 1992 to 20% in 1998 and then to 28% in 2006. This is mainly due to the sharp expansion of foreign exchange transactions of institutional investors such as asset management companies (BIS, 2002).

Judging from the situation in China, some non-bank financial institutions with strong strength and perfect risk management mechanism are expected to become important emerging forces in the foreign exchange market. In order to broaden residents' investment channels and prevent financial risks from being too concentrated, we should appropriately divert bank savings and vigorously cultivate institutional investors such as commercial insurance companies, pension funds and mutual funds. At the same time, under the premise of gradual control, some domestic funds are allowed to QDIIvest in overseas securities through qualified domestic institutional investor. The capital contribution and income of domestic investors shall be denominated in RMB. Within the quota, QDII will centrally handle the purchase and settlement of foreign exchange. Although the exchange rate risk of investment is borne by investors themselves, QDII will have the motivation to avoid the exchange rate risk of overseas investment in order to improve investment performance and attract more investors. Therefore, they should be allowed to enter the foreign exchange market and hedge through various financial instruments, which will help to increase the trading subjects of the foreign exchange market and improve the depth and breadth of the foreign exchange market. In order to increase the financial strength of these institutions, they should be allowed to enter the money market for short-term RMB and foreign currency loans.

The third is to allow more large non-financial enterprises to enter the foreign exchange market. After the restrictions on foreign exchange retention of import and export enterprises and other types of enterprises are greatly relaxed or even cancelled, a few large enterprises should be allowed to directly enter the foreign exchange market for portfolio management to avoid foreign exchange risks, so as to reduce transaction costs and improve capital utilization efficiency.

2. Introduce the currency dealer system to improve market liquidity.

Under the dealer system, dealers (usually commercial banks and investment banks) specialize in foreign exchange transactions. They can maintain a certain foreign exchange position and provide liquidity to the market at any time. Some traders can also become market makers and promise to trade according to the pre-set two-way quotation of buying and selling, so that the transaction is not limited by the actual foreign exchange supply and demand. For example, when a customer needs foreign exchange, he can buy it from the market maker even if other customers have no foreign exchange left or are unwilling to sell it. In addition to trading with customers to meet their needs, traders can also conduct a large number of transactions in order to adjust their foreign exchange positions. In the mature foreign exchange market, about 85% of spot foreign exchange transactions are conducted among traders.

The dealer system has many advantages: first, it makes the transaction sustainable and greatly improves the liquidity of the market; Second, traders constantly adjust their quotations according to market expectations and instructions, and the competition between them tends to narrow the bid-ask spread and reduce the transaction cost of the market; The third is to reduce the fluctuation of the effective exchange rate of local currency, which is confirmed by the study of 85 developing countries and countries in transition (IMF, 2003); Fourthly, traders need to avoid foreign exchange risks through various derivatives, which promotes the development of the forward foreign exchange market. Because of the above advantages, the dealer system is widely used in economies that allow the flexibility of local currency exchange rate. According to the sampling survey conducted by the International Monetary Fund in 20001,among the 55 IMF members whose currencies are quite flexible, only 4% adopt competitive trading, 44% adopt dealer system, and 48% adopt both competitive trading and dealer system (IMF, 200 1). With the further development of China's foreign exchange market and the increase of RMB exchange rate flexibility, this system should be introduced in time to improve the continuity of transactions and the liquidity of the market. Because the foreign exchange market can have multiple trading platforms at the same time, the dealer system can go hand in hand with bidding transactions. For example, transactions between traders and central banks can still be conducted through one-way foreign exchange bidding.

In China, the foreign exchange market is underdeveloped and the risk management ability of financial institutions is weak. On the one hand, the regulatory authorities should support traders and not interfere too much, on the other hand, they should strengthen supervision. First, we should really choose dealers according to the bank's asset quality and risk management standards, and do not engage in administrative examination and approval, and give preferential policies to certain ownership institutions. Second, as a supportive policy, the central bank generally only conducts foreign exchange transactions with traders to increase their trading volume and market share. Third, as long as the RMB exchange rate fluctuates within a certain range, the central bank does not have to intervene in the market, which weakens the color of the central bank's "super dealer" and broadens the development space of the dealer system. Fourth, appropriately support the weak traders to form a situation as soon as possible. In order to prevent some banks from monopolizing the foreign exchange market with their super foreign exchange funds, the central bank can provide low-cost liquidity to other major traders when necessary to make up for the temporary shortage of their capital positions. Of course, in order for these dealers to meet certain performance standards, the loans must be secured by treasury bonds or financing bonds issued by the central bank and cannot be used for other purposes. Fifth, the regulatory authorities should closely monitor the trading status of traders and the changes of currency open positions [4], and the exposure of positions should not exceed the prescribed limits. In industrialized countries, the upper limit of foreign exchange dealers' position exposure is generally 15%-20% of their capital. In recent years, some developed countries, such as the United States, have lifted this restriction and turned to monitor the overall risk status of banks (Mitchem, 1998). However, in developing countries, the exposure limit of banks' foreign exchange positions is still widespread, which is generally 20%-40% of their capital (Hartman, 1994). Empirical research shows that limiting the bank's currency position is helpful to reduce the fluctuation of the nominal effective exchange rate of the local currency in developing countries (IMF, 2003). In a word, China should set the position limit of foreign exchange dealers, which can be gradually relaxed with the improvement of banks' ability to resist risks.

3. Develop forward foreign exchange market and increase hedging instruments.

At present, four state-owned commercial banks are experimenting with forward foreign exchange settlement and sale business, but the forward foreign exchange settlement and sale business is still limited to the retail market of banks and customers. In order to facilitate customers and traders in the foreign exchange market to avoid exchange rate risks, on the basis of developing the spot foreign exchange market, we will further promote the pilot of forward settlement and sale of foreign exchange, establish a forward foreign exchange market, and develop financial hedging tools such as foreign exchange forward, currency swap, futures and options.

In the initial stage, forward foreign exchange transactions should adhere to the principle of real demand, mainly for foreign exchange receipts and payments with real trading background such as import and export trade and approved foreign investment, so as to avoid exchange rate risks. The term of a forward contract should be determined by the market. If market participants are unwilling to sign long-term forward contracts, the regulatory authorities should allow short-term forward contracts to be extended, so that market participants can avoid exchange rate risks after a long period. Regarding the pricing of forward foreign exchange, considering that there are still many restrictions on forward foreign exchange transactions and the degree of marketization is not very high, we can learn from the experience of the Philippines, South Korea and other countries, and the central bank will set the guiding forward exchange rate according to factors such as domestic and foreign spreads, and then combine the market supply and demand to get the actual forward exchange rate. With the deepening of China's interest rate marketization reform and the further liberalization of forward foreign exchange transactions, market pricing should become the mainstream. After the foreign exchange market matures, pure foreign exchange speculation should be appropriately allowed. Speculators can often be keenly aware of the deviation of the market exchange rate from the equilibrium exchange rate, and their trading activities are helpful to give play to the price discovery function of the market and improve the liquidity and operational efficiency of the market. Of course, foreign exchange speculation may aggravate market volatility, so we must be cautious in relaxing restrictions on foreign exchange speculation.

4. Establish a decentralized trading system and an independent clearing institution.

According to a sample survey conducted by the International Monetary Fund, 98% of the markets that adopt the dealer system adopt the decentralized mode, while the centralized mode only accounts for 2%(IMF, 200 1). After implementing the dealer system, China's inter-bank foreign exchange market will inevitably become decentralized and intangible. Counter remote trading should be gradually implemented, and trading subjects can learn market information and trade through their own computer terminals, so that the inter-bank foreign exchange market will become a decentralized intangible market. By then, China Foreign Exchange Trading Center will mainly undertake the following functions: continue to provide a platform for bidding transactions; Promote the construction of intangible foreign exchange market between banks; Joint major dealers, initiated the establishment of joint-stock foreign exchange market clearing companies, and so on. Clearing companies are commercial entities operating independently according to the principles of market economy, and no longer serve as institutions of the central bank. Its advantage is that it can not only prevent the regulatory authorities from directly bearing the liquidation risk, but also encourage traders to strengthen their own risk management.

Third, the system construction of preventing foreign exchange market risks.

Under the managed floating exchange rate system of RMB, exchange rate fluctuations may increase and market risks will also increase. In order to ensure the smooth operation of the foreign exchange market and prevent risks, it is necessary to further strengthen information disclosure, internal control of market micro-subjects and external supervision of relevant departments.

1. Strengthen information disclosure and reduce uncertainty.

Information is the basis of trading. Timely and sufficient information disclosure is conducive to stabilizing the expectations of market participants, enhancing mutual trust and ensuring the smooth operation of the intangible and decentralized foreign exchange market. In addition, strengthening information disclosure can also reduce the "follow the trend" behavior of small and medium-sized investors who are obviously at an information disadvantage and maintain market stability. For a considerable period of time, even if the number of trading subjects in the foreign exchange market increases substantially, the dominant position of a single bank is hard to be shaken. Therefore, it is of great practical significance to alleviate the information asymmetry of small and medium-sized investors and reduce the follow-up behavior through information disclosure. The information that needs to be disclosed in time includes: China's balance of payments and bank settlement and sale of foreign exchange, changes in international investment positions and national foreign exchange reserves, changes in market transactions and dealers' positions, etc. As for the central bank's intervention in market information disclosure, the situation is more complicated, and different countries have different practices. [5] Puji believes that even if the central bank does not publish specific information such as the time, method and trading volume of entering the market, it should also clarify the principle of entering the market in advance: if there is a fluctuation range of the RMB exchange rate, the central bank should clearly announce that it can intervene when the exchange rate is close to the upper and lower limits. After the real implementation of the managed floating exchange rate system, there is no preset floating range for the RMB exchange rate, but when the exchange rate fluctuation obviously affects the RMB real exchange rate, foreign exchange reserves or economic development, the central bank will intervene.

2. Improve the corporate governance structure of the trading subject, and strengthen budget constraints and risk constraints.

At present, most of the trading entities in the foreign exchange market are state-owned financial institutions, and they have not yet become independent and self-financing market entities. Due to the lack of risk constraints, once the regulatory authorities relax their control, they may carry out inefficient and high-risk activities, resulting in market fluctuations and systemic financial risks. Therefore, we should speed up the commercialization reform of state-owned banks and improve their corporate governance structure. One of the important measures is to allow large foreign financial institutions to participate in shares. The empirical study of 92 economies in the world shows that the complete ownership of banks by the government hinders the development of finance and the growth of productivity, and reduces the efficiency of resource allocation. In sharp contrast, after the implementation of the financial opening policy in 199 1, the performance of domestic enterprises is positively correlated with the shareholding ratio of foreign financial institutions in enterprises, indicating that foreign financial institutions are helpful to improve corporate governance structure and operating performance. In China, allowing foreign financial institutions to participate in domestic banks is conducive to introducing advanced foreign risk management experience and giving play to the supervisory role of foreign shareholders in the foreign exchange market operation of domestic banks. In addition, joint-stock commercial banks no longer enjoy government guarantees, which is conducive to strengthening the risk awareness of shareholders and stakeholders and strengthening the budget constraints and risk constraints of banks. The more such trading entities there are, the more stable the foreign exchange market will be.

3. Strengthen foreign exchange market supervision and maintain financial stability.

First, the regulatory authorities should treat all kinds of ownership transactions equally and avoid lenient treatment of wholly state-owned transactions. This can not only create a fair competitive market environment, but also prevent the subject of wholly state-owned transactions from engaging in high-risk activities due to state support and implicit guarantee, endangering financial security. The second is to strengthen information communication and policy coordination between regulatory authorities. At present, the regulatory functions related to foreign exchange transactions belong to different departments; Designated foreign exchange banks, insurance companies, asset management companies and other departments are responsible; The supervision of the foreign exchange business of the branches of the foreign exchange market and the above-mentioned trading entities belongs to the foreign exchange bureau; Once there is a liquidity crisis and systemic risk in the market, the People's Bank of China, as the lender of last resort, will also intervene. Decentralized supervision functions may affect the effectiveness of foreign exchange market supervision. Therefore, a perfect information sharing and decision-making coordination mechanism should be established among various regulatory departments. Third, the People's Bank of China should still closely monitor the subjects of foreign exchange transactions. Although the People's Bank of China no longer has the supervision function of financial institutions, as the lender of last resort, it bears the responsibility of maintaining financial stability. In order to prevent the daily business risks of foreign exchange trading entities from accumulating into systemic financial risks, the People's Bank of China should still closely monitor the changes of its assets, liabilities and currency position exposure.

Four. Concluding comments

To a great extent, the ultra-stable arrangement of RMB exchange rate against the US dollar has led the central bank to occupy an absolute dominant position in the inter-bank foreign exchange market, which has inhibited the development of the foreign exchange market and the improvement of the marketization of exchange rate formation. With the development of RMB exchange rate formation mechanism, it is necessary to speed up the construction of foreign exchange market, such as increasing market participants, introducing dealers and market makers, developing forward foreign exchange market and establishing independent foreign exchange clearing institutions. In this process, the central bank should not only properly support emerging traders and promote market competition, but also not interfere in the market too much. Its reasonable positioning is very important for the development of foreign exchange market and the improvement of RMB exchange rate system. In order to effectively prevent foreign exchange market risks, we should strengthen information disclosure, external supervision and internal risks of market participants.

Precautions:

[1] According to the classification of the International Monetary Fund (IMF 2003), the exchange rate system can be divided into the pegged system and the floating system. Regardless of whether the RMB exchange rate is pegged to a basket of currencies from the current de facto peg to the US dollar, or whether the floating range is expanded, China's exchange rate system is still pegged. Only when there is no preset range of RMB exchange rate fluctuation and the central bank can intervene the exchange rate according to the policy objectives can it belong to a managed floating exchange rate system.

[2] According to the statistics of the International Monetary Fund, the proportion of fund members with nominal floating exchange rate system rose from 34.6% in 1990 to 55.5% in 1998. However, from the actual situation, the proportion of fund members who actually implemented this system increased from 20. 1% in 190 to 44.1%in 2006 (Bubula, Otker-Robe 2002).

[3] In the future, domestic qualified institutional investors should invest in RMB instead of foreign exchange, mainly because: a large amount of RMB funds need to broaden investment channels and spread risks; Avoid giving foreign exchange holders the privilege of overseas investment, and prevent the increase in the attractiveness of foreign exchange from leading to a certain degree of substitution of RMB in China; Overseas securities investment should be considered as a whole with the way out of the domestic B-share market.

[4] that is, the difference between spot trading and forward trading of foreign exchange by dealers. These positions are not hedged and may be risky.

[5] Among the 26 members of the sample survey conducted by the International Monetary Fund in 20001,50% did not disclose the situation of the central bank's intervention in the market, and 62% did not disclose the specific amount of the central bank's intervention in foreign exchange (IMF, 200 1).

References:

1. Bank for International Settlements (BIS), 2002, "Foreign exchange and derivatives market activities in 2006 5438+0", triennial central bank survey.

2.Bubula, A. and I. Otker-Robe, 2002, "Evolution of Exchange Rate Regime since 1990: Evidence from Factual Policy", IMF working paper 02/ 155.

3.Hartman, p. 1994, "foreign exchange rate control: problems of industry and developing countries", IMF working paper, WP/94/1.

4. International Monetary Fund (IMF), 200 1, Survey of Foreign Exchange Market Organizations.

5. International Monetary Fund (IMF), 2003, Foreign Exchange Arrangements and Foreign Exchange Markets.

6.Khanna, Tarun and Krishna Palepu, 1999, "Emerging Market Enterprise Groups, Foreign Investors and Corporate Governance", NBER Working Paper 6955.

7. Rapota, R.F. Lopez-de-Silane, and A. Shriver, 2000, "Government Ownership of Banks", NBER working paper 7620.

8. Dr. mitchum, 1998, "Foreign exchange market: an operational perspective", mimeographed.

(International Economic Review 2003+05438+0- 12)