Examining China: China as a Nonreserve Currency Country
Abstract
China’s central bank has been accused of many things by its detractors. Some US Senators and even presidential candidates have accused China, we think unfairly, of being a currency manipulator. Yet, as we look back in time and focus on the data, we find that during its fixed exchange rate period, China’s central bank has shown a clear understanding of the role of a nonreserve currency country. It is as if the Chinese central bankers had been at the University of Chicago when Nobel Laureate Robert Mundell and the late Harry G. Johnson were developing the “Monetary Approach to the Balance of Payments.” If there ever was a textbook case, China is it. Let’s see why.
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