The Study On The Scale Optimization Of China's Foreign Exchange Reserve

Foreign exchange reserve is the important part of international reserve. It has an important role for protecting the balance of the international payments and the stability of exchange rate, intervening in the foreign exchange market, repaying debt, improving the international standing. If it is excessive, it will affect the monetary policy and waste resources. If it is short, it will difficult to play a role fully. So an appropriate level of reserves is a necessary for the normal development of the national economy. This thesis bases on existing research and further study the scale of China's foreign exchange reserves by an empirical analysis. Firstly, we judge the scale of foreign exchange reserve and conclude that it's excessive. We analyse the source of foreign exchange reserves and descript its economic impact. Secondly, from the perspective of supply and demand we conduct an empirical work on influential factors and conclude that net export and external debt are important factors of China's foreign exchange reserves. And lastly, we analyse these two factors and learn some experiences from other countries and try to provide reasonable suggestions to help to control the pace of growth of foreign exchange reserves.