The Influence Of Source Structure Of Foreign Exchange Reserve On Money Supply In China

The foreign exchange reserve is the important representation of one country's economy strength, and is the material guarantee of resistance international financial risk. Besides, it is of vital importance in the area of international financial research. After Southeast Asia Financial Crisis, more and more people paying attention to the issue of foreign exchange reserve. The foreign exchange reserve of our country is growing rapidly and continually since the foreign exchange management system reform in 1994. It is growing especially fast after Southeast Asia Financial Crisis. Substantive foreign exchange reserve not only reinforces our country's external payment capability and accommodating balance of payments capability, but also improves our country's economy strength. At the same time, it makes some negative influence on economic development of our country. The rapid increasing of foreign exchange reserve results in geminate growing of money supply which enhance inflation burden and make a great challenge to our economic development. But the different source of foreign exchange reserve has different economic meaning that lead different impact to basic money even money supply. Therefore, the study of influence that the main source of foreign exchange reserve made on money supply is profound meaningful not only to improve the efficiency of central bank's macroscopical control of basic money, but also accelerate healthy and stable development of our economy.Based on the domestic and overseas scholars' research of foreign exchange reserve, using the theoretical analysis and the empirical analysis methods, the dissertation firstly analyses the theory of relationship between balance of payments and money supply. Secondly, the author introduces our country's foreign exchange reserve and its major source in detail. Based on the analysis of the way that foreign exchange reserve making influence on money supply, the author deeply analyses the influence of main source of foreign exchange reserve on money supply. Then by establishing a model on the basis of cointegration theory, the author analyzes the main source of foreign exchange reserve's short-term influence on money supply and long-term relationship between them. The findings of empirical study make out that the balance of imports and exports and foreign direct investment which as the major source of foreign exchange reserve are both the reason of basic money changing. Finally, According to the results, the dissertation puts forward some Countermeasures to eliminate and weaken the impacts that the major source of foreign exchange reserve brings to money supply in our country. We should adjust trade policy timely, look for new acts to in charge of capital liquidity in reason, deepen foreign exchange management reformation, seek new usage of foreign exchange reserve and use instruments of monetary policy synthetically.