The Influence Of Increasing Foreign Exchange Reserves To Monetary Policy In China

The foreign exchange reserve is a comprehensive variable, which excessively has the significant influence to a country economy more or less. In the last few years, our country foreign exchange reserve is increasing so much. Up to March of 2007, the total amount of country foreign exchange reserve has already amounted to 12,020.31 hundred million US dollars. When the foreign exchange reserve grows in the reasonable scope, it has the very great function to the economic development. The foreign exchange reserve has its advantageous, which could enhance the capability of international payment, maintain national and enterprises'foreign credit level; The enough foreign exchange reserve could control international finance risk, which could strengthens the confidence to our country economy and the Renminbi . That also could enhance our country economy status and the finance credit rating.On the other hand, the fast growth of foreign exchange reserve also has brought some negative influences to our country's economic development. With present exchange control system , the RMB counterpart of foreign exchange reserves are the main channel which is our country Central Bank putting the base currency into economy. The fluid surplus current situation will determine the amount of the base currency putted into entire economy and weak the independence monetary policy.At the beginning, this article talks about evolution process of our country foreign exchange reserve, analyses the reason of the increasing of foreign exchange reserve, and carries on the summary of the foreign exchange reserve research. After that, article introduces the influence of the foreign exchange reserve to the monetary policy. It analyses our country's foreign exchange reserve restriction and mechanism to the monetary policy. The main target of the article is to carry on the real diagnosis to the foreign exchange reserve with each correlation factor by using the measurement analysis method. Eviews4.0 statistics software is used to analyze the foreign exchange reserve and the monetary policy. The article also discusses thoroughly the reason why the foreign exchange reserve grows so fast. Finally, based on the conclusion, it put forward the corresponding proposal and the measurement tochina's foreign exchange reserve.