Size Of China's Foreign Exchange Reserves

The foreign exchange reserve plays an important part in the balance of international payments, the stable of exchange rate, reimbursing of the foreign loan and keeping away international finance crisis. But the excessive foreign exchange reserve will increase the inflation pressure, reduce the efficiency of economy. Since the middle of the last century, especially the new century, the foreign exchange reserve of China increased swiftly and violently. China not only became the most rapidly growing country in foreign exchange reserve, but also had too much the surplus of foreign exchange reserve. The sufficient foreign exchange reserve will play an important role in dealing with the financial crisis, stabilizing the exchange rate, promoting economy development. But the excessive foreign exchange reserve also brought the negative effect to economy. For instance: It will increase the pressure of inflation and the Renminbi revaluation, increase the risk of the property and the difficulty of the management of the foreign exchange reserve, waste capital, pay huge opportunity cost and so on.This paper mainly aims at rapidly increasing scale of the foreign exchange reserve recent years, firstly outlines the definition, nature, determining factors of foreign exchange reserve, then introduces the basic situation of the foreign exchange reserve, analyses the influence to economy, and gets the conclusion that the foreign exchange reserve of China is excessive through the quantitative and the qualitative analysis. finally, aiming at the disadvantageous influence to economy brings forward solutions to the excessive foreign exchange reserve from the foreign exchange reserve management and the system innovation.This paper includes five parts:The first part mainly outlines the foreign exchange reserve. It includes the meaning of the foreign exchange reserve, the ability of international pays off, the function of foreign exchange reserve, the supply and the demand of foreign exchange reserve.