Research On The Structure Management Of Chinese Foreign Exchange Reserves

Since the beginning of the21st century, our country’s foreign exchange reserves keep growing fast, and the main part of our country’s foreign exchange reserves consists of dollar asserts, which leads to the concentration of our foreign exchange reserves’ risk. After the United States subprime mortgage crisis in2008, to push the dollar down, the Fed sharply cut the interest rates and frequently used quantitative easing policy. The dollar’s depreciation makes U.S. goods more competitive on world markets, but it makes our country’s foreign exchange reserves come across a very big loss, and the whole society has been questioning the management ability of our country. In this background, it is a big challenge about how to manage our country’s foreign exchange reserves,which also influences the future development of our international economy and trade.First, the background and meaning of this paper will be introduced, including the foreign researches on the management of foreign exchange reserves. In the second part, the growth and structure of our country’s foreign exchange reserve will be introduced. Also, the reason why our country has accumulated so much foreign exchange reserve will be analysed. This paper will also use the Mean-Variance Model to carry out the optimal structure of China’s foreign exchange reserves. Finally, this paper will make some suggestions on the management of foreign exchange reserve, based on the brief conclusion of Mean-Variance Model and the experience of managing foreign exchange reserves in some developed countries.