The Analysis Of Optimal Scale Of China's Foreign Exchange Reserves

Foreign exchange reserves is the core of the international reserves and of vital importance in the area of international finance research. It is related to a country's ability to stabilize the currency exchange rate and balance of payments adjustment, has been of concern by the governments and international financial institutions. In an open economy, foreign exchange reserves is an important indicator to examine a country's foreign economic relations, it is not only an embodiment of the macroeconomic operating, but also an important means of macroeconomic regulation and control.Huge foreign exchange reserves has bid farewell to shortage of foreign exchange in China's history, which serves to attract foreign investment and launch foreign trade, it is of great significance to maintain RMB exchange rate steadily, safeguard national financial security, is the embodiment of China's overall national strength; However, the coordination between foreign exchange reserves Rapid growth and the domestic economy became a more difficult problem, which has brought greater pressure on the reserve management, and a range of adverse effects of economic development is also apparent increasingly.This paper briefly describes the meaning of the foreign exchange reserves and it's optimal scale, then analyzes the impact of supply and demand factors of foreign exchange reserves. Subsequently, it has given a brief review of the history of China's foreign exchange reserves and the status quo, in—depth analysis of the reasons for the rapid growth of China's foreign exchange reserves. On the basis of research from domestic and foreign, modified Agaraual model was comprehensively used to calculate the size of China's foreign exchange reserves, and draws a conclusion that the scale of China's foreign exchange reserves is not appropriate, and it has analyzed the impact of huge foreign exchange reserves on China's economic development. Finally, the author draws international experience on the huge foreign exchange reserves management, puts forward the policy and suggestions of China's foreign exchange reserves management.