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Thick politics has manifested itself in the struggle between the People's Bank of China and China Banking Regulatory Commission. That fixed peg, which had been in place since 1996, was cancelled abruptly in late July, though the new system adopted by Chinese leaders is far from free-floating But the announcement by the People's Bank of China was accompanied by a slight increase in the yuan's value and a pledge to "move into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Yet the Fed circa 1979 and People's Bank of China circa 2004 have something in common: both lost control of the money supply. |
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