A Research On China's Sterilized Intervention About Central Bank's Notes

Since 2000, driven by International balance of payments surplus in pairs, China's foreign exchange reserves have grown rapidly, and position for forex purchase increased significantly. in the circumstances of lacking hedging operating instruments, in order to maintain moderate growth in the domestic credit and the basic stability of RMB exchange rate, the People's Bank through issuing central bank's notes hedged Position for forex purchase. Since then, the central bank's notes to become the main tool in China sterilized intervention.As China's international balance of payments surplus is caused by a variety of factors at home and abroad, position for forex purchase rigidity of growth has its own institutional reasons. Despite the short term, due to the international financial crisis, making the problem of excess liquidity brought by position for forex purchase has eased, but in the long run, if the above does not occur because of a big change, the excess liquidity caused by position for forex purchase is still a problem that central bank need to face. Therefore, hedging excess liquidity is still an important task of monetary policy. In this context, to study the central bank sterilized intervention, for improving write-off of China's central bank foreign exchange market intervention, to achieve a balanced inside and outside China's economy and the future exchange rate regime reform has an important significance. Therefore, I chose this topic for research.First, the main contents of papersIn this paper, a total of text structure is divided into six parts:Introduction Chapter 1 as the main topics of this article includes background, literature review and research ideas and methods; Chapter 2 for an overview of central bank's notes, from position for forex purchase substantial growth and the lack of hedging instruments describes the two aspects of central bank's notes issued by the reason behind it, and summarizes the central bank since April 2003 Note Issuance and its significance; in Chapter 3 as the theoretical basis for the central bank sterilized intervention, mainly the use of Mundell-Fleming Model and the portfolio model of central bank intervention in foreign exchange offset the effectiveness of its determinants are analyzed; in Chapter 4 pairs of central bank's notes, the effectiveness of hedging operations have been studied, first of all pairs of central bank's notes to offset the principle of regulation described in detail, followed by the use of central bank's notes, the relevant data for an empirical test of its effectiveness, draw relevant conclusions; in Chapter 5 of the central bank's notes, the issue of hedging operations are discussed, mainly from a cost and efficiency of central bank's notes was examined two aspects of hedging operations sustainability; in Chapter 6 on the central bank's notes, write-off of the other issues are reviewed, and the actual situation of our country, put forward the relevant policies and proposals.Second, the main contribution of paperFirst of all, a comprehensive and systematic study of the central bank's notes issued by the causes and distribution status. The issuance of central bank's notes, the number of varieties according to their finishing time was calculated and analyzed, pointing out that the issue of medium-term trend; calculate the central bank's notes issued each year should be the payment of interest and the actual payment of interest, detailing the cost of central bank's notes, write-off, and through Contrast 3-month and 1-year rate and the central voting the same period in the U.S. Treasury interest rates, analysis of central bank's notes, the interest write-off may cause the central bank to bear the loss.Secondly, in the write-off of central bank's notes, the analysis set out in regulation and control mechanism, based on the use of central bank's notes issued since the data until the end of 2008, using cointegration test and Granger causality test, the central bank's notes, control our money supply and the hedge foreign exchange account shall conduct an empirical analysis show that since 2003 the central bank to issue bank notes in China-based write-off regulatory policy is effective.Finally, the annual calculation of the amount of central bank's notes, the year of issuance, when the balance due amount and the number of the year, combined with central bank's notes to offset the effectiveness of its expiry with the principle of the efficiency of central bank's notes, the offset is calculated, obtained the efficiency of central bank's notes written off weaken the conclusions.Third, the inadequacies of this articleFirst of all, there is no right position for forex purchase write-off for international comparison; second, in analyzing the formation of the central bank sterilized intervention by the existence of asset exchange gains and losses, the exchange gains and losses not considered the issue to a certain extent affected the accuracy of the analysis; and third, Because I measure the level of the limited effectiveness of central bank's notes, write-off study may not sufficiently precise. In the later study, I will continue to upgrade my theoretical level, and on these aspects to make further discussion and study. Finally, I would urge the assessment experts and teachers to reply to my article to provide guidance.