Allowing a little more currency appreciation can be quite desirable for the sake of the Chinese economy and the region as a whole. The Chinese economy is quite resilient. At the same time, foreign exchange reserves are rising fast. |
Any shock hitting the US economy or the global market may change investors' perceptions given the existing global current account imbalance. |
Asian governments, central banks and the private sector will have to focus more on bond market development and really strengthen market infrastructure. |
Bond markets are deepening worldwide, but emerging East Asia is moving ahead at a faster rate. |
Experience in many countries tells us that by accumulating foreign exchange reserves, eventually the monetary policy consequences could be big. |
Our suggestion to Asian countries is: Don't take this continuous financing of the U.S. current account deficit as a given. |
Perhaps a single currency may come after that. |
Perhaps China is accumulating too much foreign exchange reserves. |
The individual exchange rates won't be supported officially...but if this index is relatively stable vis-a-vis external currencies then it's quite useful. |
The market is still growing. But the growth rate in 2005 moderated a little bit from the previous year's growth. |
The possibility of a US dollar collapse or sharp decline may be small at this point but it would generate very significant turmoil so East Asian economies... ought to be ready for that. |
There's been significant progress, but that progress is not quite enough. |
We are suggesting greater exchange rate flexibility for certain countries which are accumulating larger amounts of foreign reserves. |
We have a plan to create several indexes, but we want to make these indexes as attractive as possible to the market. |