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recent years. To avoid such losses,Chinashould reduce dollar reserves by a proper amount and expand the share of foreign exchange reserves of the euro, sterling and yen[9].

Figure 2 Reasonable currency structure ofChina's foreign exchange reserves[10]

At the same time,Chinacan increase the investment in high-yield currencies such as Australian dollar, Canadian dollar and T-bonds of emerging market countries[11]. On the choice of assets, in addition to maintain a certain amount of highly liquid, highly rated government bonds and money market instruments, China should also increase the high-risk, high-yield varieties, such as foreign equity investment.Chinaheld a large number of U.S. Treasury bonds, which are sensitive to changes of interest rates and exchange rates. But equity is relatively stable with higher yield, which is suitable for long-term investment and can be used as speculative reserves. In addition, part of the U.S. dollar assets of the massive foreign exchange reserves can be transformed into gold reserves to improve the foreign exchange reserve structure[12]. AlthoughChina's foreign exchange reserves have maintained an amazing growth rate, the proportion of gold reserves is far less than the standard of 3% to 5% adopted in other countries. This level of gold reserves doesn't matchChina's strategic position. Increasing China’s gold reserves, on the one hand, can optimize the strategic structure of China's foreign exchange reserves to ease the pressure exerted by the foreign exchange reserves; on the other hand, it also beers important practical significance to national security in the current ever-changing international situation.

Conclusion

 

Foreign exchange reserves are mainly used to cope with the imbalance of international payments, maintain the stability of exchange rate and a nation’s international reputation and improve its competitiveness. To achieve these goals, the management of foreign exchange reserves emphasize on safety and mobility, which determines that we should hold foreign exchange reserves in a moderate scale and it is not conducive to economic development whether the foreign exchange reserves are too much or too little. As the largest developing country with special national conditions, the scale of our country’s foreign exchange reserves should not only ensure that the need of international payments is sufficient, but also stabilize the need of foreign exchange of economic entities, thus resisting the crisis and impact caused by the developing of international finance. It is worth reconsidering whether the scale of our country’s foreign exchange reserves is essentially too large. In recent years, our nation’s foreign exchange reserves surge mainly because of the combination of surplus of current account and capital account. However, its sources and developments are not stable in the long run. There’s a great possibility that the current account will follow the trend of gradual narrowing some period in the future. The increase of FDI afterChina’s entry into WTO is a short-time phenomenon resulted by foreign investors seizing the Chinese market, which cannot last long. And the “double-surplus” in current situation will not be stable. On the other hand, it’s inevitable that capital management is relaxed and hot money 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。