Increment Of Foreign Exchange Reserves And Analysis For Its Impact On And Countermeasures To Monetary Policy

after entering into WTO, the ever-enlarging size of capitalflow and foreign direct investment, and favorable balance of trade havemade the foreign exchange reserves of our country increase extraordinarilyand have become the significant factor of restricting the validity ofmonetary policy. Under such circumstances, investigating into how to treatthe rapid increasing of foreign reserves and effectively regulate it, and itsinfluence on monetary policy have intensive theoretical and practicesignificance. Buying using analytical means of criterion and demonstration,the paper discusses the issue from the following four aspects:First, the paper illustrates the existing status of foreign exchangereserves of our country in recent years, and points out that the increment offoreign exchange reserves has showed obvious accelerating tendencythrough analyzing the proper size for foreign exchange reserves. Then,through analyzing the factors influencing the foreign exchange reserves,the paper advances that large foreign exchange reserves have bring greatimpact on and strike to monetary policy. In the second part, starting fromanalyzing the theoretical mechanism between foreign exchange reservesand monetary policy, the paper discusses the influencing process according to the particularity analysis of monetary policy under opening economy. Inthe third part, the paper dwells on the specific impacts of foreign exchangereserves on the implementation of monetary policy, such as the inflationand currency appreciation caused by the enlarging money supply, affectingthe structure of money supply and transmission process and independencyof monetary policy, etc. In the last part, the paper proposes relevant advicesand countermeasures to eliminate the negative impact of foreign exchangereserves on monetary policy from the perspective of inner cooperation ofmonetary policy and optimizing of the foreign exchange reservesmanagement.