First, adjust the balance of payments to ensure external payment.
The second is to intervene in the foreign exchange market and stabilize the local currency exchange rate.
The third is to maintain international reputation and improve external financing ability.
The fourth is to enhance comprehensive national strength and ability to resist risks.
A certain foreign exchange reserve is an important means for a country to adjust its economy and achieve internal and external balance. When the balance of payments is in deficit, the use of foreign exchange reserves can promote the balance of payments; When the domestic macro-economy is unbalanced and the total demand exceeds the total supply, foreign exchange can be used to organize imports, thus adjusting the relationship between total supply and total demand and promoting macroeconomic balance. At the same time, when the exchange rate fluctuates, foreign exchange reserves can be used to intervene in the exchange rate to stabilize the exchange rate. Therefore, foreign exchange reserves are an indispensable means to achieve economic balance and stability, especially when economic globalization is developing and one country's economy is more susceptible to the influence of other countries' economies.
Generally speaking, increasing foreign exchange reserves can not only enhance macro-control ability, but also help to maintain the international reputation of countries and enterprises, expand international trade, attract foreign investment, reduce the financing cost of domestic enterprises, and prevent and resolve international financial risks. The appropriate level of foreign exchange reserves depends on many factors, such as import and export, the scale of foreign debt, and the actual utilization of foreign capital. Foreign exchange reserves should be kept at a moderate level according to the comparison of income and cost and these conditions.
As a symbol of a country's economic and financial strength, foreign exchange reserves are the material basis for making up its balance of payments deficit, stabilizing its exchange rate and maintaining its international reputation. For developing countries, it is often necessary to maintain foreign exchange reserves above the conventional level. However, the more foreign exchange reserves, the better. In recent years, the rapid expansion of China's foreign exchange reserves has had many negative effects on economic development.
1, which damages the potential of economic growth. The inflow of foreign exchange reserves of a certain scale represents the outflow of physical resources of a corresponding scale, which is not conducive to a country's economic growth. If the extraordinary growth of China's foreign exchange reserves continues, it will damage the potential of China's economic growth.
2. It has brought great price difference loss. According to conservative estimates, if you have 600 billion US dollars in foreign exchange reserves, the annual loss will be as high as 654.38+000 billion US dollars if the difference between the investment profit rate and the foreign exchange reserve yield is 2%. If the risk of exchange rate changes is taken into account, this potential loss will be even greater. In addition, most of the foreign exchange reserves of many countries are dollar assets. If the dollar depreciates, the country's reserve assets will also shrink seriously.
3. The opportunity cost is greatly lost. China will introduce about 50 billion US dollars of foreign capital every year, so the state will provide many tax incentives; At the same time, China holds about $600 billion in foreign exchange reserves, which are idle. In this way, on the one hand, the state's fiscal revenue is reduced, on the other hand, the people are frugal and lend money to foreigners, and its potential opportunity cost cannot be ignored.
4. Weakened the effect of macro-control. Under the current foreign exchange management system, the central bank has unlimited responsibility to buy back foreign exchange funds, so with the growth of foreign exchange reserves, the amount of foreign exchange has been increasing. The rapid growth of foreign exchange not only restricts the effectiveness of macro-control since 2004, but also weakens the effect of macro-control structurally, further increasing the pressure of RMB appreciation, making the central bank's space for regulating monetary policy smaller and smaller.
5, affect the use of international preferential loans. Excessive foreign exchange reserves will make China lose the preferential loans from the International Monetary Fund. According to the regulations of the IMF, countries with sufficient foreign exchange reserves can not only enjoy preferential and low-interest loans from the IMF, but also provide assistance to other member countries with balance of payments difficulties when necessary. This is a waste for our country.