Moderate Scale Of Foreign Exchange Reserve In China

With the further development of Chinese economic opening from 90's, Chinese especially after the reform of Chinese foreign exchange system in 1994, the foreign exchange reserve has been increasing at a high speed, reaching US$100 billion in 1996, and being up to US$818.9 billion in the end of 2005, ranked the second in the world after Japan.As a significant national financial asset, foreign exchange reserve should give attention to its security, liquidity and profitability. According to the problem of moderate scale of foreign exchange reserve, the thesis analyses the characteristic and reasons for the increased foreign exchange reserve since 1994, secondly, it discusses the advantages and disadvantages of the rapid increase of foreign exchange reserve theory. Meanwhile it measures and calculates foreign exchange reserve moderate scale by choosing different aspects and establishing mathematical expression, in order to demonstrate whether foreign exchange reserve is overlarge. Last but not least, this thesis raises a proposal about how to reinforce foreign exchange reserve.