中国的外汇储备如何管理How to Manage Chinas Foreign Exchange.docx
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中国的外汇储备如何管理How to Manage Chinas Foreign Exchange.docx
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中国的外汇储备如何管理HowtoManageChinasForeignExchange
毕业论文外文文献翻译
院系:
厦门理工学院商学系
年级专业:
08财务管理2班
姓名:
林芬
学号:
0801032242
附件:
HowtoManageChina’sForeignExchangeReserves?
指导老师评语:
指导教师签名:
12年3月8日
HowtoManageChina’sForeignExchangeReserves?
Author:
KeLiu
Advisor:
ErikStrojerMadsen
AarhusSchoolofBusiness
MScinFinanceandInternationalBusiness
November2007
Abstract
Financialcrisisisnotanewtermtotheworldandhasbeenthroughthefinancialglobalizationinthepastdecades.Manydevelopingcountrieschoosetostockpilealargeamountofforeignexchangereservestoprotecttheireconomyfromexternalshocks.However,giventhedecliningvalueoftheUSdollar,therapidbuilt-upofreservesalsocreatesanewdebateonwhatamountandwhichformtoholdforemergingeconomies.ThispaperattemptstoaddressthetwoquestionsforChina,thelargestreserveholdersince2006.Byperforminganempiricalanalysisof42developingcountries,aseriesofconclusionsaredrawn,includingamajorconfirmationthatChina’sholdingofreservesexceedstheestimatedadequatelevel.Withacombinationoftellingevidenceandtheoreticalinterpretation,thispaperprovidesapackageofsolutionstotheissueofhowtomanageChina’sforeignexchangereservesinthelong-termandshort-termscenarios.Tofundamentallyslowdownthegrowthrateofreservesandreducetheaggregateamount,ashiftineconomicpoliciesisdesired.Meanwhile,takingintoaccounttheopportunitycostofholding,acourseofproactivereservemanagementwouldbeadvisable.
Keywords:
foreignexchange,reserves,China,reservemanagement
PartIIntroduction
Foreignexchangereserves,alsorefertointernationalreserves,areindispensablefinancialresourcesofaneconomicentity.Toeveryopeneconomicregion,theamountofreservesheldbymonetaryauthorityvariesdramaticallybasedonanarrayofvestedpoliciesandobjectives.TheInternationalMonetaryFund(IMF)identifiedaneconomy’sinternationalreservesas“thoseexternalassetsthatarereadilyavailabletoandcontrolledbymonetaryauthoritiesfordirectfinancingofpaymentsimbalancesthroughinterventioninexchangemarketstoaffectthecurrencyexchange,and/orforotherpurposes.”Thecommonlyusedformconsistsofconvertibleforeignexchangeheldbymonetaryauthoritiesintheformofcurrency,deposits,securitiesorfinancialderivatives,monetarygold,specialdrawingrights(SDRs),andunconditionaldrawingrightswiththeIMF.
Individualcountries,especiallythosewhohavealargevolumeofinternationaltrade,experienceahighriskofrandomshockstotheirexternalbalances,resultingfromtemporaryorcontinuoussuddendropsoftheirforeignexchangeearnings.Therefore,internationalreservesservetoabsorbsuchundesiredcrisesthroughfinancingthepaymentdeficits,whichinturnavoidthecostsofmacroeconomicadjustment.Inaddition,foreignexchangereservescanbeusedtoserveexternaldebtoractasthecollateralforinternationalborrowing.Forthoseeconomicentitieswhoundertakeafixedexchangeratepolicy,internationalreservesalsoplayanimportantroleinbackinguptheircurrenciesandenhancingthecountries’credibility.
Astheinternationaltradeflowincreasesandglobalfinancialintegrationevolves,thedemandforinternationalreserveshasgrownaswell.In1990,theworldaggregateholdingofreservesamountsto$919billionandChina’ssharemerelyequals3.3percentatthattime.Sixteenyearslater,however,theworld’stotalholdinggrowsupto$5,038billion,morethanonefifthofwhichiscontributedbyChina.
Figure1:
China’srecentbuilt-upofreserves
Duringthepastdecade,Chinahasaccumulatedahugelumpsumofforeignexchangereservesduetoitsprominenteconomicdevelopment.InlateFebruary2006,ChinasurpassedJapantobecometheworld’slargestholderofforeignexchangereserves,andattheendofMarch2007,thisnumberreaches1.2trillionU.S.dollars.ThereservetoGDPratioisapproximately40percentattheendof2006,whiletheworldaveragelevelwasaround10percent.Oneviewisthatreserveshavebeenaccumulatedasinsuranceagainsttheriskofbalanceofpaymentscrises,whichcametobeperceivedashigherafterthe1997-98SoutheastAsiancrisis.
Althoughthestronglyexport-orientedeconomicdevelopmentaccountsforpartoftheupwardtrend,FDIinflowshavebeenassumedtoberesponsibleforabigportionofthereserves.Despiteofcapitalcontrols,evidencealsoindicatesthatspeculativecapitalflowsintothiscountrythroughvariouschannels,bettingontheappreciationofRMB.
Asalargetransitionaleconomy,Chinaisinastageofrapideconomicdevelopmentandrestructuring.Largeforeignexchangereserveshelptomaintainthecredibilityofboththecountryanditscurrency,toexpandinternationaltrade,toattractoverseas
investment,tolowerthecostoffinancingitsinstitutionsintheireffortstoentertheinternationalmarket,toenhanceoverseasfinancingcapacityandtoupholdsteadygrowthasthecountrydevelops.
However,someeconomistsarguethattherecentheavyforeignexchangeaccumulation,includingrapidlyincreasedspeculativecapitalflows,hasaugmentedriskstothecountry’sfinancialsystem,exacerbatedinflationarypressure,createdhugeopportunitycoststhatresultedinlargewealthlosseswiththeweakeningdollar,intensifiedpressurefortheRMBappreciationandfinallyincreasedthecomplexityofmacroeconomicadjustmentandforeignexchangereservemanagement.
Therecentlargeincreaseininternationalreserveshasgeneratedadebateontheoptimallevelofreservesforemergingcountries.However,quantitativeliteratureonreserveshaslaggedsomewhatbehindthepolicyquestionsraisedbytheinternationalfinancialcrisisofthe1990s.Theheydayofthereserveadequacystudydatesbacktothe1960sandthe1970swithamajorpitfallofdifficultiesinquantifyingdeterminants.Policymakershaveoftenusedrulesofthumb,suchasmaintainingreservesequivalenttoquarterlyimportsorthe“Greenspan-Guidottirule”offullcoverageoftotalshort-termexternaldebt.ButthisisnotthecaseforFarEastcountrieswithmorefinancialassetsandliabilitiesunderfinancialglobalization.
Dooleyandothers(2004)assertthatreservesbuildupinAsiaistheunintendedconsequenceofpoliciesthatmaintainlargecurrentaccountsurpluses.Li(2006)refutesthatChina’sforeignexchangereservesarenotexcessivebecauseitneedssufficientreservestomaintainthestabilityofitscurrencyandtomaintaintheconfidenceofinternationalinvestors.HealsoarguesthatChina’sforeignexchangereserveshavebeenrewardedbysufficientreturns.Frankel(2004)emphasizestheopportunitycostofhugeforeignexchangereservesandconcludesthatChinahasbeenpresumablypayingforeigninvestorsontheirinwardinvestmentahigherreturnthantheearningmadefromitsforeignexchangereserves.Xia(2006)estimatesthat$700billioninforeignexchangereservesshouldbesufficient.
Therefore,theissueaboutwhatistheoptimalsize,orinotherterm,theadequatelevelofChina’sforeignexchangereservesneedstobeaddressed.Currently,mostrelevantresearcheitherfocusesongeneraldiscussionsofdeterminantsofthedemandforforeignexchangereservesorempiricallyanalyzescountries’holdingcompositions.However,littleworkpaysattentiontoathoroughanalysisofforeignexchangereservesmanagementwithaChinesefeature.Furthermore,astheUSdollarisexpectedtodepreciateinthelong-runduetoitslargecurrentaccountdeficit,bothevidenceandtheoriessuggestadiversificationofforeignexchangereservesawayfromasingleUSdollarstructure.Hence,howtoallocateChina’sforeignassetsisthesecondquestiontobeanswered.
ThispaperexaminestheclaimthattheforeignexchangereservesofChinaarenotonlysufficientbutalsoexceeditsdemandforliquidityandothermajoreconomicconsiderations.Withthisconfirmation,thelatterphasecentersonhowtoadjustthecurrentleveltotheadequatelevelestimated.
PartIILiteratureReview
Mostquantitativeliteratureoninternationalreserveholdingsisbasedontheoriesdevelopedinthe1960s,whentheworldadheredtotheBrettonWoodsSystemandtheglobalcapitalflowswererelativelysmall.Theframeworkofanalysisonreserveadequacyandoptimalitycouldbeclassifiedbythemethodologiesusedintotwocategorizes:
ratiosastoolsofanalysisandregressionanalysis.Thefollowinggivesachronologicalretrospectofpreviousstudy.
2.1RatioAnalysis
Reservetoimportratio
ThemostwidelyusedratiomethodwastheratioofreservetoimportfirstgeneralizedbyTriffin(1947,1960).Itisarguedthatthedemandforreservesshouldmoveinlinewiththetrendininternationaltradesincereceiptsandpaymentswereobservedtobevolatile.Heconcludesthatmajorcountriesshouldmaintainaconstantreservetoimportratiorangingfrom20percentasaminimumto40percentmaximally.However,thismethodwasbornwithalmostequalnumberofcriticsandadvocators.Machlup(1966)discreditsthetheoreticalbasisfortheassumedrigidreserve-importratioasitlacksofevidenceandtheoryonwhysuchratioshouldremainconstantacrosscountriesorthroughtime.Ashisdefense,threeotherratios,includingreservetolargestannualreservelosses,reservetodomesticmoneyandquasimoney,reservetoliabilitiesofcentralbanks,wereusedtoexplainthebehaviorsof14industrialcountriesfrom1949to1965.Hestatedthat“onpurelyeconomicgrounds,reservesareheldonlyforthepurposeofbeingeventuallyused.”However,thisexparteassumptionalsoneglectsaprecautio
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