The Impact Of Exchange Rate Changes On Financial Security

With the improvement of the economic globalization,the transnational flow of capital shows a rising trend,and the investment and financing activities of enterprises in China are becoming more and more active.Exchange rate is conversion ratio with foreign currency used in offshore investment and financing,its changes directly affect the risk of overseas investment and financing.And exchange rate changes will pose impact on Chinese enterprises' assets and liabilities progressively as well.Because the changes of exchange rate influent all enterprises' net overseas assets in same direction,this shift also increases the risk of whole economy.Exchange rate policy of PBC and China's State Administration of Foreign Exchange must consider the risk tolerance of enterprises as well as economic sectors and industries.The enterprises must strengthen exchange rate risk control to prevent liquidity depletion in the process of carrying out overseas business.So enterprises' risk control has a higher request for exchange rate administration.The other hand,exchange rate risk does not work alone,it is closely linked with all aspects of the economy.In this paper,a more comprehensive model is constructed based on the micro enterprise data and macroeconomic data.And highlight the role of high risk sector through calculate index of different economic sectors.Because default risk is not only affected by assets and liabilities change interiorly but also overseas,exchange rate risk can be linked to default risk through changes of foreign assets and liabilities.Based on this relationship,this paper constructs financial security index(FSI),which joins accounting report data to EDF model and expert method,to measure the macroeconomic sector default risk.Finally introduce stress testing method with Monte Carle,measure the change of FSI in given confidence interval in preset pressure situation and come to the conclusion.