Study On The Relevance Of International Balance Of Payments And Required Reserves

Since2006, the People’s Bank of China has been36times in a row to adjust the statutory deposit reserve rate. The general theory holds that changes in the deposit reserve ratio causes the excess reserves of commercial banks, the money multiplier and the the social money supply strong vibration and the whole economy will have a significant impact Exactly what prompted the People’s Bank of China frequently adjust the deposit reserve rate it? Zhou Xiaochuan, governor of the People’s Bank of China particular emphasis on relationship adjustment of deposit reserve ratio and foreign exchange in the Eleventh National People’s Congress on March12,2012.He believes that, compared to monetary policy, the deposit reserve ratio and the balance of payments surplus associate degree is more important. China’s international balance of payments since the foreign exchange system reform in1994, in addition to1998shows a small capital and financial account deficit has been maintained double surplus of the current account and the capital and financial account. The huge amount of the balance of payments surplus caused the growth of foreign exchange reserves and foreign exchange excessive problem. That foreign exchange greatly excessive expansion the money supply is an important reason of excess liquidity in China In this case, we must take the appropriate means to sterilize inflows and the central bank has taken the policy that adjust the deposit reserve ratio frequently from July2006to December2008, China’s statutory deposit reserve ratio experienced eighteen consecutive raised and the continuous decline of four times from January2010to June2011, China’s statutory deposit reserve continuous upward12times, Because of the decline of the rate of economic growth in first three quarters of the2011, foreign exchange had been reduced。In Dec.2011and Feb2012, China’s statutory deposit reserve ratio had been lowered twice. The correlation analysis of the balance of payments surplus and deposit reserve rate has been became a worth analyzing problem.Since July2006, our country frequently adjust the of the statutory deposit reserve for the problem of excess domestic liquidity.And though adjustment of the deposit reserve ratio to suppress the excessive growth of monetary and credit and to prevent the economy from becoming to overheated development and inflation. In theory, raising the deposit reserve ratio had a significant effect to control the scale of commercial bank credit. What about the effect of small amplitude, low-frequency adjustment of the statutory deposit reserve ratio whether the statutory deposit reserve policy is "ax", and will give the economy a big shock. Frequently raised the deposit reserve ratio whether played a certain influence on the tightening of loans from financial institutions. These problems are worth us to discuss.Firstly, this paper will make the mechanism analysis of the impact of the international balance of payments surplus to the deposit reserve ratio, then, we analysis the relationship between the balance of payments and the reserve requirement through the empirical methods of static and dynamic the results show that,from the static correlation analysis point of view, the foreign exchange reserves and foreign exchange deposit reserve rate exists long-term stable relationship, And the foreign exchange reserves and foreign exchange are the Granger cause of the changes in the deposit reserve ratio, From a dynamic role of effectiveness, the affection of the international balance of payments to the deposit reserve dynamic is growing. In the analysis of the effectiveness of the deposit reserve policy, we use the indicator of the financial institution loans ts to analyze the changes in the deposit reserve ratio to loans The results show that there is a long-term stable integration relationship between the deposit reserve ratio and financial institution loans, and the changes of the deposits prospective rat is the Granger cause of loans Finally, this paper presented the policy recommendations to promote the balanced development of China’s economy.This thesis has two innovative points. First, previous research is limited to the effect that Balance of Payments Surplus and money supply. Very few academics research on the relation with international balance of payment and reserve requirement ratio. About their relationship, this paper analyses from two aspects which are direct index of international balance of payment, foreign exchange reserves, and monetary indices, funds outstanding for foreign exchange. Second, based on reserve requirements impacts on the loan-growth rates, this paper presents an analytic to the effect of frequent adjustment reserve requirement ratio in recent years.The inadequacies of this paper is the that we only from the deposit reserve requirement ratio for loans when analysis of the effect of the deposit reserve ratio and the analysis is not comprehensive enough, Because of the author’s knowledge is limited, there is not enough depth of defects in the study of the article, which also is the direction of future improvements.