A Research On The Risk Management Of China's Foreign Exchange Reserves

China's foreign exchange reserve increased dramatically in recent years and the number reached 1946 billion dollars up to the end of 2008.Its number is not only surpassed the Japan and also ranked first in the world.The management of the larger number of foreign exchange reserve arouse our attention and the most important problem is the risk management and control,the optimization of the foreign exchange reserve structure and the reduction of foreign exchange reserve's holding cost.So with the big number of China's foreign exchange,the relatively single form of the assets and the low efficiency of foreign exchange management efficiency,how to use foreign exchange reserve effectively,reduce risk and the improve the management of foreign exchange reserve has become a matter of high priority.And we need to analysis the problem according to the real situation of the China's foreign exchange reserves,and then make suitable strategies to avoid the risk.This paper analysis the management of large number of China's foreign exchange reserve and use the method of textual description and empirical analysis, besides the paper provide a large number of econometric model and charts to describe the scale,the structure and the portfolio of China's foreign exchange reserve.The article also analyses the management system of China's foreign exchange reserve. Finally,get the method about the management of China's large number foreign exchange reserve and provide forward proposal about risk management of China's foreign exchange reserve.This thesis includes four chapters.In Chapter One(Introduction),the theoretical and practical significance of this subject is introduced,relevant studies from home and abroad are outlined and the main viewpoints.Chapter Two tells about the history of China's foreign exchange reserve and the present state.Give the readers an outline of China's foreign exchange reserve.Chapter Three and Chapter four is the major of the full text,in the two parts,the article analysis the scale and structural risk management.In chapter three relevant studies from home and abroad are outlined and varies ways to check whether the foreign exchange is over-weighted is introduced,the factors which contribute to the large scale is summed up.Then the conclusion that China's foreign exchange reserve is too large and there is scale risk is made.And then use the empirical analysis of measurement model to analysis the factors that affect the scale of foreign exchange, and get the conclusion.Finally,the paper provides some useful advice in solving the risk management of foreign exchange scale.Chapter Four introduces the structural risk management of foreign exchange. Firstly,the chapter introduces the theory about the structural management and categories as the currency management.And then makes a comparision to advanced experience of foreign country,points out that the arrangement of the asset has some risks and need to improve.At last,brings up some policy advices on foreign exchange reserve management.