Research On China's Foreign Exchange Reserves Management

With economic growth and foreign trade development, the number of foreign exchange reserves of China is enlarging. According to Central Bank statistics, the scale of foreign exchange reserves was only $ 840 million in 1979 that is the beginning of China's reform, and then reaches $ 3.1975 trillion at the end of June 2011. China has the largest scale of foreign exchange reserves in the world.Foreign exchange reserves can keep international payments balance, pay off debt deficit, maintain exchange rate stability and supply emergency payments. Foreign exchange reserve management pays more attention to safety, liquidity and profitability. Design the currency structure of foreign exchange reserves; it should consider foreign trade structure, foreign direct investment and reserve currency status in the international monetary system. Take a part of foreign exchange reserve assets as investment, it should combine many asset allocations, make portfolios and classify asset, such as bonds, gold assets and non-financial assets.China has high level on the scale of foreign exchange reserves at present. Foreign exchange reserves can adjust international balance of payments, keep exchange rate stability, maintains international reputation, and make response to fluctuations in foreign exchange markets, etc. It plays an important role on promote economic development, prevent financial risks, assure payment security. But the large scale of foreign exchange reserves will spend a large mountain of management costs and increase management difficulty. Meanwhile, the structure of China's foreign exchange reserve is unreasonable. U.S. dollar is accounted for a large proportion, which cause the existence of certain financial risks and safety hazards. In addition, how to make good use of foreign reserves is a problem.The thesis is divided into four parts:The first part give the concept of foreign exchange reserves, and show the theoretical overview of foreign exchange reserves; The second part introduce the development process of China's foreign exchange reserves, and analysis the scale, structure, investment and management of foreign exchange reserves at present, and then propose the problem and give the causes; The third part introduce some successful experiences on foreign exchange reserves in four developed countries; The fourth part give some suggestion on how to manage foreign exchange reserves. It includes that reduce the scale, adjust the structure and improve returns. The study on China's foreign exchange reserves can enhance management.