Study On Singapore's Foreign Exchange Reserve Management Model And Its Experience

The foreign exchange reserve is the core of the international monetary system. It is also an important issue in the field of international finance, and has been the general concern of the international financial institutions and the governments in the world. Since the reform of RMB exchange rate regime in 1990's last century, China's foreign exchange reserve has entered a period of rapid growth. It had increased from about 100 billion U.S. dollars in 1996 to one trillion U.S. dollars in 2006, 1.5282 trillion U.S. dollars at the end of 2007, and reached a record of 1.946 trillion U.S. dollars in 2008.Huge foreign exchange reserves are of great importance to maintain the stability of the RMB exchange rate in China and improve China's comprehensive national strength and international status. But for China, as a developing country of shortage of productive resources, there will be certain opportunity costs to hold huge foreign exchange reserves, such as the waste of resources and the pressure of RMB appreciation. Thus, to improve the economic benefits and the asset returns of foreign exchange reserves has become an issue that's most worthy of concern while taking full account of the mobility and security. It is imperative to explore the suitable and positive way of foreign exchange reserves management by combining with the current status of China's foreign exchange reserves management and the experience of Singapore's foreign exchange reserve management model - the Monetary Authority of Singapore (MAS) + the Government of Singapore Investment Corporation (GIC).This thesis introduces in detail the overview of the five major countries of Southeast Asia's foreign exchange reserves and analyses the reasons for its formation. It systematically expounds Singapore's foreign exchange reserves management model, including introductions of the functions, organizational structure of the Monetary Authority of Singapore (MAS) and its activities of the foreign exchange reserves management and investment. It deeply analyses the long-term assets return rate, portfolio profiles, portfolio management, risk control, corporate governance, and human resources mechanism of the Government of Singapore Investment Corporation (GIC). It also makes constructive suggestions and recommendations such as establishing tiered foreign exchange reserve management system, diversifying investment channels, improving relevant laws, establishing mechanisms for multi-level talent, commissioning investment by combining with the current situation and difficulties faced of China's foreign exchange reserves management.