The de facto US dollar-pegged exchange rate regime of renminbi has held back the development of the foreign exchange market. The adoption of the real managed floating regime in the near future can only be achieved in the process of the development of foreign exchange market. The market development mainly includes the increase of transaction entities, the introduction of a dealer system, the development of the forward market, and the establishment of an independent settlement and clearing house. The central bank's intervention in the market should be reduced dramatically and a level playing field should be created for all market participants to foster competition. To prevent the systemic financial risks, it is crucial to strengthen information disclosure and improve the policy coordination of various regulatory authorities. The central bank needs to closely monitor transaction entities as a lender of last resort.
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