The Research On Early Warning System Building For Personal Foreign Exchange Flow

After accession to the WTO, China’s economy grows constantly with rising international status. The rapid increase of import and export trade and investment has become an important pillar of the domestic economic growth. In the post financial crisis, as the largest emerging developing countries, China has attained much international hot money inflows because of its stable development and fruitful profit opportunities, leading to more and more influences on domestic foreign exchange reserves and new foreign exchange. Too much foreign exchange inflows will cause abusing currency issuance of the central bank, which is apt to cause domestic price and asset price fluctuations. Therefore, predicting foreign exchange and money supply in advance is critical for policy-makers to make the right and effective policy decision.In theory, the money supply is determined by the legal deposit reserve rate, excess reserve rate, cash to leak rate and the base currency, which is an important tool controlled by the central bank. Foreign exchange is an important channel of base currency issuance. Through analyzing the links between Chinese foreign exchange, foreign exchange reserves and banking exchange balance, the author comes to the conclusion that banking exchange balanceis the most important component of foreign exchange. Banking exchange balance mainly consists of personal exchange balance and enterprise exchange balance. Under the current foreign exchange administration frame, personal exchange is of more conveniences and confidentiality than enterprise exchange. Therefore, it can reflect the trend of fluctuations of the banking exchange balance and foreign exchange, and finally warn the trend of fluctuations of the basic money supply.Empirically, this study uses the stepwise regression method to analyze the national personal exchange from2006to2010, comes to the conclusion that personal exchange leads the banking exchange, and determines its leading cycle. On this basis, this study analyzes personal cross-border foreign exchange and banking exchange according to the business characteristics of personal exchange, building the following four indicators:1.personal cross-border capital inflows (outflows) split predicted rate indicator;2.Personal single transaction inflows (outflows) rate of the project indicators;3.source/destination monitoring indicator of personal exchange. Finally, this study evaluates their effectiveness through case analysis.