Research On The Positive Management Of China's Foreign Exchange Reserve

As the main part of international reserves,foreign exchange reserve is a significant macroeconomic variable reflecting on country's economic and financial power. Usually, China definitely needs a certain amount of foreign exchange to ensure external payments, interfere with foreign exchange market and promote the country credit. But excessive exchange cover scale may produce the administration problem: scale controls problem, cost and avails. Since the reform of RMB exchange rate regime, by the end of 2007,the total amount of foreign exchange reserve has reached 1528 billion USD,outclassing any other country in the world.Based on the growing foreign exchange reserves, how to use foreign exchange reserve effectively, reduce risk and then improve the management of foreign exchange reserve has become a matter of high priority. Strengthening management of foreign exchange reserve is also an urgent issue, particularly in the form of a single and low efficiency circumstances in China. The paper includes five parts: the first chapter discusses the theories of foreign exchange reserve, traditional management and positive management; Secondly, the paper empirically analyses the history of the China's foreign exchange reserve reform and various factors that may affect reserve; Thirdly, this paper illustrates the positive management of foreign exchange reserve from experience of America, Japan, EU, Korea and Singapore; At last this paper concludes with suggestions on future management regime of foreign exchange reserve and some noticeable problem.