China’s recent currency peg to the US$: Its BOP, its attempts to defend the peg, the likely macro-adjustment it faces without sterilization, and its sterilization policy. What has been the end result of China’s peg and sterilization for the Chinese economy? Do China’s US$ reserves threaten the Chinese economy? Explain the PBOC position on the global reserve currency.

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China recently had an objective to defend its currency peg with respect to the US dollar China pegge... View the full answer