The Moderate Scale Of Foreign Exchange Reserve And Management Research In China

In the end of2013, Chinese foreign exchange reserves renewed the record, reaching＄3.82trillion, compared with the record of last year, there was an increase of＄509.7billion; annual increment also historically reach the new record at the same time. To an opening countries, the scale of foreign exchange reserves is of great significance, which can be used to adjust the imbalance of international payments and guarantee the foreign debt repayment capacity, and simultaneously are the important means to intervene foreign exchange markets, stabilize the exchange rate of domestic currency and improve international confidence to the domestic currency; it can also reduce the possibility of "economic crisis contagion". However, the more foreign exchange reserve the better is not always true, because holding excessive reserve would sacrifice a lot at the same time, which for instance, can lead to the resources wasting, inflation, and also will affect the independence and authorities of monetary policy. In recent years, as China’s degree of openness is increasing gradually and constantly, and the international capital flow is also becoming more and more frequently; scholars are increasingly concerned about the issue of appropriate scale of our country’s foreign exchange reserves. However, with the constant changes in the development of international economy, the standards to appropriate scale of reserves are constantly changing, so scholars have not reached the consensus. As a developing country in its deepening period, how much and scale the foreign exchange reserves should China hold is the question on which should be focused by governments and academies.This paper discusses the moderate scale of the foreign exchange in a relative deeper system. On the basis of literatures domestic and abroad, the analyst analyzed the factors affecting the size of foreign exchange reserves, and with the improved models of Agnes Walter and the considered appropriate scale model to the prevention of financial risk factors, the analyst also completes the China’s foreign exchange reserves empirical analysis. The conclusion is that China holds excessive foreign exchange reserves in recent years, and the gap between the actual size of the estimated model to the reserves of foreign exchange and that of exact one is increasing annually step by step; the estimated moderate size of the improved model to Agarwal of foreign exchange reserves is less than the estimated appropriate scale of the risk factors considered in the prevention of financial risks. Based on the estimation of model-based, the excessive-China’s foreign exchange reserves is larger. Finally, this paper analyzes the causes of the formation of excessive reserves, and put forward countermeasures and suggestions to the scale of foreign exchange management.