Exchange Rate Mechanism (often referred to as ERM) refers to the relationship and interaction between Exchange Rate fluctuations and changes in supply and demand in transactions, and is one of the automatic adjustment mechanisms of international balance of payments imbalance.
The exchange rate mechanism is a very important issue in the economic development of a country, as well as an important means for a country to implement economic regulation and control. It reflects the country’s foreign value and economic strength, and directly affects the balance of foreign trade, capital flow and international payments of a country.
The choice of exchange rate mechanism, like the economic development mode, should be based on the national conditions of the country to formulate an effective and reasonable exchange rate mechanism.
