Accountability and Oversight of U. S. Exchange Rate Policyby C. Randall Henning
The dispute over Chinese exchange rate policy within the United States has generated a series of legislative proposals to restrict the discretion of the Treasury Department in determining currency manipulation and to reform the department's accountability to the US Congress. This book reviews Treasury's reports to Congress on exchange rate policy-introduced by the Exchange Rates and International Economic Policy Coordination Act of 1988-and Congress's treatment of them. It finds that the accountability process has often not worked well in practice: Coverage of the reports has sometimes been lacking, and Congress has not always conducted firm oversight. Several recommendations can improve guidance to the Treasury and congressional oversight. These include (1) refining the criteria used to determine currency manipulation, (2) explicitly harnessing US decisions on manipulation to the International Monetary Fund's rules on exchange rates, (3) clarifying the general objectives of US exchange rate policy, and (4) institutionalizing multicommittee oversight of exchange rate policy by Congress. Furthermore, as they develop legislation targeting manipulation, legislators should not lose sight of the broader purposes of the 1988 Act relating to the overall value of the dollar and its impact on the US economy.
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