Foreign Exchange Reserves Risk Management Research Of China

By the end of September 2008 as China's foreign exchange reserves reached 1,905 billion U.S. dollars. The more exposed position of foreign currency reserves, the greater the risk. It is an important economic and strategic significance to make good use and better control of the risk of China's large foreign exchange reserves. Based on this economic background, the purpose of this article is to do quantitative and qualitative research on risk management of China's foreign exchange reserves.This paper first analyzies the sources and causes of China's foreign exchange reserves. Based on these analysis, this paper puts forward the main risks of China's foreign exchange reserves.We divides these risks into three categories: risk of excessive foreign exchange reserves,external risks of foreign exchange reserves and internal risks of foreign exchange reserves.Then, this paper does quantitative and qualitative analysis on these three types of risks. Against the risk of excessive foreign exchange reserves, this paper does moderate size empirical research on China's foreign exchange reserves. And the reserch finds, since the beginning of 2002, China's foreign exchange reserves exceeded the modest size and the scale beyond the modest amount is increasing. This paper does empirical analysis on the exchange rate risks of China's foreign exchange reserves. VAR model adopted by China's foreign exchange reserve currency adjustments can be effective to reduce the exchange rate risks of China's foreign exchange reserves. Propose to increase China's foreign currency reserve assets in euro,Japanese yen and Hong Kong dollar, besides to dilut US dollar assets.In this paper, we do research on the world's leading countrys' foreign exchange reserves risk management systems.They can be summed up in two categories: the level of the reserve risk management system and the two-level risk management system.After sum up and draw on the country's foreign exchange reserves experiences in risk management systems, we put forward to design and construct a comprehensive risk management framework of China's foreign exchange reserves from the legal, institutional and institutional. Finally, in accordance with the above-mentioned analysis, this paper proposes some suggustions on the risk management of China's foreign exchange reserve. In order to give references to the diversification strategy, the optimal allocation of foreign currency reserve assets and the risk management theory and policy of China's foreign exchange reserves.