Research On The Scale And Structure Of China’s Foreign Exchange Reserves

After the reform and opening up, China’s foreign exchange reserves gradually increased.As the end of June2012, China’s foreign exchange reserves have reached＄3.24trillion, ranking first in the world. The huge foreign exchange reserve has improved China’s external ability to pay, and increased the confidence of overseas investors, and formed a strong guarantee for China’s rapid economic development and support. Massive foreign exchange reserves not only bear a higher opportunity cost, but also directly affect the effectiveness of central bank monetary policy. In view of the above reasons, I chose "Research on the scale and structure of China’s foreign exchange reserves "as a thesis topic to research how to more effectively make use of China’s massive foreign exchange reserves. This article will focus on moderate size of China’s foreign exchange reserves, the rational structure of foreign exchange reserves and foreign exchange reserves management system optimization, giving positive proposals and expect to resolve the problem of massive foreign exchange reserves.In the economic context, this paper first described the formation of China’s foreign exchange reserves and the reasons for the rapid growth in recent years then make use of ratio analysis to calculate moderate foreign exchange reserves of China. Then draw the conclusions that China’s foreign exchange reserves is over excess, and then combined with other country’s foreign exchange reserve management experience, make recommendations on optimization of China’s foreign exchange reserves managementAfter analysis and research of the rational structure of China’s foreign exchange reserves, the paper pointed out that the fundamental way to solve the problem of excess foreign exchange reserves is to increase domestic demand and shift from "foreign exchange held by the state "to " foreign exchange held by the people". Subsequently, the paper analyzes the status of insufficient domestic demand and "foreign exchange held by the people" in China and how to increase domestic demand and turn to" foreign exchange held by the people ":for example, a release the purchase of foreign exchange amount in the current account to give people sufficient foreign exchange funds,in capital projects, give nationals direct investment opportunity to establish a standard and individual foreign direct investment channels and gradually broaden investment channels for businesses and individuals to hold foreign currency in existing conditions.Finally, this paper proposed the establishment of foreign exchange stabilization fund as China’s foreign exchange reserves management system optimization measures, not only to control "export off’, it should also control "import off’ of the formation mechanism of the source of the reform of foreign exchange reserves to cut off the relationship of foreign exchange reserves growth and domestic money supply and it’s important to put forward policy recommendations to improve the foreign exchange reserves legislation...