Study Of China's Foreign Exchange Reserves And Monetary Policy Run

After the reform of Chinese foreign exchange system in 1994, foreign exchange reserve tends to be an important factor that may firmly influence the progress of macroscopical economy because of the increasing foreign exchange reserve and the gradual openness of Chinese economy. This essay will analyse the scale of Chinese foreign exchange reserve, especially focus on some influence that Chinese monetary policy encounters from excessive foreign exchange reserve.Within the definition of moderate scale of foreign exchange reserve and current monetary policy, this essay will research the scale of Chinese foreign exchange reserve in terms of theory and reality. Therefore, the point is that Chinese foreign exchange reserve is excessive. According to the principle of monetary policy, this essay will attempt to analyse the relationship and effects between excessive foreign exchange reserve and monetary policy, then present that government may use intervening policy of quits foreign exchange as the main method to harmonize reserve policy and monetary policy. Also, this essay will present some relative suggestions and countermeasures for improvement and promotion of the current quits foreign exchange policy.