Do China's capital controls still bind? Implications for monetary autonomy and capital liberalisation
Guonan Ma and
Robert McCauley ()
No 233, BIS Working Papers from Bank for International Settlements
The paper argues that China's capital controls remain substantially binding. This has allowed the Chinese authorities to retain some degree of short-term monetary autonomy, despite the fixed exchange rate up to July 2005. Although the Chinese capital controls have not been watertight, we find sustained and significant gaps between onshore and offshore renminbi interest rates and persistent dollar/renminbi interest rate differentials during the period of a de facto dollar peg. While some cross-border flows do respond to market expectations and relative yields, they have not been large enough to equalise onshore and offshore renminbi yields.
Keywords: Foreign exchange market; capital flows; capital controls; monetary policy; financial stability and the Chinese economy (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:233
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