Despite such elements of flexibility, an inflation-targeting regime may still not typically attend sufficiently to output variation or financial stability. Furthermore, these elements of flexibility may not foster the credibility of the central bank any better than a system of multiple objectives. The longer the policy timeframe and the wider the band for an inflation-targeting regime, the lower credibility will tend to be.
According to a survey by Deutsche Bank, it is possible to negotiate average price reductions of just under 5%.4 Many Chinese enterprises prefer to invoice in renminbi in any case, as it is difficult for them to exchange foreign currencies for renminbi.