proven, and they solidified the ground on which the common currency established Chinas Policy Choices over Exchange Rate Regimes There is continuous theoretical debate in the history of exchange rate regimes since the beginning of the 1970s, when the Bretton Woods system collapsed and exchange rate regimes of many countries kept evolving. In reality exchange rate arrangements are not the simple dichotomy of fixed or floating exchange rates According to the IMF, there are eight categories of exchange rate arrangements, and the IMF's view regarding exchange rate arrangements also evolved over time during the bretton Woods era. the imf was of the opinion that fixed exchange rate arrangements were better. Before the Argentine crisis, it argued for the bipolar view(either fixed or floating) while after the crisis it called for floating exchange rates. After 2009, the IMF took the view that exchange rate arrangements all had merits and shortcomings The floating exchange rate arrangement has several merits. First, using a floating exchange rate makes it easy to adjust to economic shocks, and the arrangement itself is less vulnerable to speculative attacks. It also helps to avoid the resource misallocation caused by exchange rate distortions. But floating exchange rate also has its problems. For example, it may cause uncertainty or excess fluctuation or overshooting and it leads to a larger exchange rate risk. Fixed exchange rate arrangements are favorable because they give rise to lower inflation(for developing countries)and facilitate more investment and trade however they also result in exchange rate distortions and are vulnerable to currency crisis and speculative capital flows3 proven, and they solidified the ground on which the common currency is established. China’s Policy Choices over Exchange Rate Regimes There is continuous theoretical debate in the history of exchange rate regimes since the beginning of the 1970s, when the Bretton Woods system collapsed and exchange rate regimes of many countries kept evolving. In reality, exchange rate arrangements are not the simple dichotomy of fixed or floating exchange rates. According to the IMF, there are eight categories of exchange rate arrangements, and the IMF’s view regarding exchange rate arrangements also evolved over time. During the Bretton Woods era, the IMF was of the opinion that fixed exchange rate arrangements were better. Before the Argentine crisis, it argued for the bipolar view (either fixed or floating), while after the crisis it called for floating exchange rates. After 2009, the IMF took the view that exchange rate arrangements all had merits and shortcomings. The floating exchange rate arrangement has several merits. First, using a floating exchange rate makes it easy to adjust to economic shocks, and the arrangement itself is less vulnerable to speculative attacks. It also helps to avoid the resource misallocation caused by exchange rate distortions. But a floating exchange rate also has its problems. For example, it may cause uncertainty or excess fluctuation or overshooting, and it leads to a larger exchange rate risk. Fixed exchange rate arrangements are favorable because they give rise to lower inflation (for developing countries) and facilitate more investment and trade. However, they also result in exchange rate distortions and are vulnerable to currency crisis and speculative capital flows