The Research On Foreign Exchange Reserve Management In China At Present

The foreign exchange reserve is of great importance to an open economy system, and it is a guarantee to melt the deficit of balance of payments, intervene the foreign exchange market so as to maintain the stability of the exchange rate of the currency in its own country and to borrow and repay the foreign loan. But there are certain costs to hold the foreign exchange reserve, such as the yield (opportunity cost) to import the capital articles with the reserve and the waste of the resource resulted from it. Too fast increase of the reserve will bring the pressure of inflation, thus resulting in the pressure of revaluation of its own currency, the restriction to the independent right of the Central Bank currency policy and the negative impact on the adjustment of the industry configuration. Under the condition of the increasingly large scale of the international currency flow, how to fix on the reasonable quantity of the reserve in a country is a hot issue to be discussed in every country. Meanwhile, how to relieve the negative impacts resulted from the rapid increase of the reserve, such as the pressure of inflation, the anticipation of revaluation and the decline of agility of the currency policy, is a demanding issue to be handled. The continuous devaluation of the American currency makes the reserves in each country suffer a distinctive lose. For the developing countries, how to effectively manage the foreign exchange reserve to achieve keeping the value and revaluation is a practical and important issue to the currency authorities. Under such circumstance, choosing Research On Foreign Exchange Reserve Management In China At Present as the title, the author analyzes and discusses it in detail. Through the research of the thesis, the author gets the following main innovative viewpoints:1 The popular theories on the foreign exchange reserve scale in the world mainly study the moderate scale of the foreign exchange reserve from different views. These theories have their own advantages, and some disadvantages as well. The author thinks that different countries, based on the practical situation, should select the theory suited their own country to fix on the moderate scale of the foreign exchange reserve.2 The demand on the foreign exchange reserve in China in the long term will be enormous, while the reserve supply is not optimistic. When the economy is suffering some strike, the demand on the foreign exchange reserve in the struck countries rise dramatically, while the reserve supply decline dramatically. Therefore, the developing countries need the exceeding accumulation of the foreign exchange reserve to meet the demand in crisis. As a result, because it is not big, the present foreign exchange reserve scale should include the portion of exceeding accumulation of the future reserve.3 In the short term, because of the intervention of the Central Bank and the incomplete market mechanism, there isn't any obvious correlativity between the increase of the foreign exchange reserve and the rise of the price. In the long run, the foreign exchange reserve can indirectly influence the consumption price index by influencing the currency issuance, thus increasing the pressure of the price rise. The increase of the foreign exchange reserve will result in the revaluation of the Chinese currency, while the correlation index is relatively small. In the long term, the increase of the foreign exchange reserve will inevitably result in the revaluation of the currency in its own country; the passive increase of the foreign exchange reserve and currency supply reduces greatly the go-aheadism of the currency supply controlled by the Central Bank; the increase of the foreign exchange reserve in our country results in the change of the currency supply channel and exerts some influences on the increasing gap of the wealth between the east and the west: the increase of the foreign exchange reserve has some relations with the expansion of the gap of per-capita GDP and the resident's consumption level between the east and the west. The consumption level of the residents in the east increases obviously slowly, and that isn't in harmony with the fast increase of the foreign exchange reserve and per-capita GDP in the corresponding period. That indicates the exaltation effect of the foreign capital direct investment on the consumption level of the residents in the east China has come into the era of marginal benefit decline.4 To relieve the negative impact of the increase of the foreign exchange reserve on the economy from the system and mechanism, the government should improve the following parts, such as strengthening the construction of the foreign exchange market, pushing the innovation of the exchange rate, strengthening the supervision on the capital projects, pushing steadily the external indirect investment, adopting actively the other counteracting measures and developing actively the currency market, etc.5 The author advices the government to set up an international reserve strategy decision-making team under the guidance of the State Department and co-concerted by government agencies to achieve the high harmony and concert among the departments on the reserve management. The author also advises the government to set up the corresponding authorization system to the commission management portion and the self-management portion of the Central Bank.6 Another advice is to divide the foreign exchange reserve into two parts and manage respectively: one is stable combination and the other is investment combination. The author makes a plan on the arrangement of the assets construction and currency construction of the foreign exchange reserve in our country.