Research On Legal Issues Of Foreign Exchange Reserve Management

In recent years, China's foreign exchange reserves have risen considerably, which leads to the increasing cost and risk of holding foreign exchange reserves. At this background, for obtaining the greatest income on the precondition of ensuring the safety of the foreign exchange reserve, it is very pressing to regulate the conducts in the process of foreign exchange reserve management and to establish a law system for more active and effective management of foreign exchange reserve.At present, the legal rules for regulating the management of foreign exchange reserve is rare, which leads to the non-standardization of the conducts in the process of foreign exchange reserve management. So, it is quite important and pressing to legislate to regulate the foreign exchange reserve management, which is undoubtedly of strategic importance and practical significance for improving the legal system of foreign exchange reserve management and achieving the goal to maintain the origin value of foreign exchange reserve and its increment.With the exception of the introduction and conclusion, the paper is divided into six parts.The first part"the meaning and function of foreign exchange reserve". At the beginning, this part explains the meaning of foreign exchange reserve. After that, this part introduces the important function of foreign exchange reserve. The purpose of this part is to explain the urgency and necessity of regulating foreign exchange reserve management.The second part"the principles in the process of foreign exchange reserve management". This part mainly expresses the principles and the contents in the process of foreign exchange reserve management. By the introduction of this part, we can roughly understand the basic knowledge of foreign exchange reserve management.The third part"institution of foreign exchange reserve management". This part firstly analyzes the setting, the function and the operation of the institution of foreign countries'reserve management. Then, this part analyzes the status quo and the problems of the institution of our country's reserve management. Central bank's administrative function is not separate from management function for foreign exchange reserve management. The authority and responsibility of management institutions are obscure. People doubt the legitimacy of the management institution. There is lack of an effective authorization mechanism in China's reserve management system. At the end of this part, the paper make suggestions for improving our country's institution of foreign exchange reserve management.The fourth part"system of foreign exchange reserve management". Based on the analysis of other countries'dual management system and multiple management system, this part analyzes the defects in the present system of China's reserve management. The defects include that the management layer lack unity and coherence; there is lack of uniform management system; central bank plays a monodrama in the management system. Then, this part explains the importance that National Ministry of Finance joins our country's reserve management system and plays a leading role in the system. At the end of this part, the paper also gives some pieces of advice for improving China's system of foreign exchange reserve management.The fifth part"model of foreign exchange reserve management". At the beginning of this part, on the view of macroscopic, this paper contrasts the positive management model with the active model. Then, on the view of microscopic, this part analyzes the management model of the main exchange reserve investment company in the world. After that, this part sums up some experience for improving our country's model of foreign exchange reserve management. To be concrete, we should establish the authority system between China Investment Corporation(CIC) and National Ministry of Finance; improve the corporate governance of CIC; establish the market-based operation mode and choose the appropriate investment strategies.The sixth part"the supervisory system of foreign exchange reserve". This part firstly explains the importance of establishing China's supervisory system of foreign exchange reserve by the manner of analyzing the risks of China's foreign exchange reserve management. Then, this part analyzes the principle of transparency, the system of internal supervisory and the framework of risk management in IMF Guidelines for Foreign Exchange Reserve Management. In addition, this part also introduces other countries'system of internal supervisory and external supervisory. At the end of this part, the paper also makes suggestions for improving our country's supervisory system of foreign exchange reserve.The seventh part"the perfection of China's foreign exchange reserve management". This part focuses on two subjects that are domestic law and international law. In terms of domestic law, China should specially institute the laws on the subject of foreign exchange reserve management, such as"foreign exchange reserve management law"and"Chinese investment corporation law", which could legislatively regulate the management conducts from both microscopic aspect and macroscopic aspect. In terms of international law, CIC should observe the principles of international economic law, particularly observe the multilateral agreements under the auspices of WTO.At present, Chinese amount of foreign exchange reserve has taken the first place in the world and the amount is still rapidly increasing, which put forward more advanced requests for Chinese foreign exchange reserve management. However, Chinese exchange management conducts are not in a regular way, because there are lacking the relevant laws in China. Therefore, in order to reduce the risk and achieve the goal to maintain the origin value of foreign exchange reserve and its increment, China should institute the detailed laws on the subject of foreign exchange reserve management so that we can regulate the conducts of exchange management, which is based on the international experience and our national situations.