been adjusted against the cross country inflation differentials. there are various opinions on the currencies in the basket. though it is necessary to take into account trade, capital flow and other factors, weighted trade is usually the major factor to consider because capital flow fluctuates. specifically, the effective exchange rate basket should have a variety of currencies to reflect diversification of trade and investment. the weight is to be determined based on the current account situation and the currency structure of capital and financial account and of cross - border receipt and payment. the reference of a basket of currencies is reasonable in theory. in practice, however, the nominal effective exchange rate, which is not inflation - adjusted, is more frequently used, for the following reasons : first, it is hard to settle on a universally accepted and comparable price index. though commonly used, the cpi may not be appropriate according to academicians as it includes prices of many non - tradables. other options, such as ppi, gdp deflator and the index of per unit labor cost, are not widely accepted. second, the calculation of real effective exchange rate has to deal with the time lag and availability of data, and price indices such as the cpi are subject to time lags and comparability. there are easily accessible and real time data for nominal exchange rate while it takes one month to get cpi and ppi readings, at least one quarter to get gdp deflator and even longer for the index of per unit labor cost. moreover, statistical coverage of countries varies greatly and some countries hardly have comparable data. compared with pegging to a single currency, the exchange rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner. it has two - way movements of exchange rate. the rmb exchange rate has been basically stable at an adaptive and balanced level though it may fluctuate in both ways against any particular single currency. since the rmb exchange rate regime reform that started in 2005, the focus of public communications has been the rmb exchange rate regime with reference to a basket of currencies. but the mindset of focusing too much attention on rmb / usd exchange rate cannot be changed overnight due to behavioral habits and the dominant use of us dollar in accounting and statistics. this underpins the necessity for china to make more efforts to improve the exchange rate regime based on market supply and demand

poor man get a good job if he has not benefited from good healthcare and education in the first place? in this modern world where good skills are critical to a good job, the unskilled have little recourse but to take a poorly - paying job or to look for the patronage that will get them a good job. so do we not arrive at a contradiction : the good delivery of public services is essential to escape the dependence on bad public services? money liberates and empowers... we need to go back to the drawing board. there is a way out of this contradiction, developing the idea that money liberates. could we not give poor households cash instead of promising them public services? a poor household with cash can patronize whomsoever it wants, and not just the monopolistic government provider. because the poor can pay for their medicines or their food, they will command respect from the private provider. not only will a corrupt fair price shop owner not be able to divert the grain he gets since he has to sell at market price, but because he has to compete with the shop across the street, he cannot afford to be surly or lazy. the government can add to the effects of empowering the poor by instilling a genuine cost to being uncompetitive – by shutting down parts of the public delivery systems that do not generate enough custom. much of what we need to do is already possible. the government intends to announce a scheme for full financial inclusion on independence day. it includes identifying the poor, creating unique biometric identifiers for them, opening linked bank accounts, and making government transfers into those accounts. when fully rolled out, i believe it will give the poor the choice and respect as well as the services they had to beg for in the past. it can break a link between poor public service, patronage, and corruption that is growing more worrisome over time. undoubtedly, cash transfers will not resolve every problem, nor are they uncontroversial. a constant refrain from paternalistic social workers is that the poor will simply drink away any transfers. in fact, studies by ngos like sewa indicate this is not true. moreover, one could experiment with sending transfers to women, who may be better spenders. some argue that attaching conditions to cash transfers – for example, they will be made provided the bis central bankers ’ speeches recipient ’ s children attend school regularly – may improve the usage of the