Will one-way bet capital inflow destabilize Chinese financial system?

Is this still the main “danger” facing the renmimbi?

Measures to suppress volatility may encourage speculators to all line up on one side of the market, at present the side anticipating further appreciation, subjecting the economy to worrisome capital inflows and aggravating the risk of overheating.

Barry Eichengreen “Long and Short of It” p. 6.

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About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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