Second, the increase in foreign exchange reserves should correspondingly expand the money supply. If there are too many foreign exchange reserves, it will increase the pressure of inflation and increase the difficulty of monetary policy. In addition, holding too much foreign exchange reserves may also suffer losses due to the depreciation of foreign exchange rate, so foreign exchange reserves should be kept at a moderate level. 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. We should keep foreign exchange reserves at a moderate level according to the comparison of the benefits and costs of holding foreign exchange reserves and these conditions. To increase foreign exchange, you need to issue RMB to buy it. If the supply of RMB increases, then the RMB will depreciate and of course the exchange rate will fall. China and other countries in the world often use foreign exchange reserves in foreign trade and international settlement, mainly including US dollars, euros, Japanese yen, British pounds and so on.
I. Introduction
The English name is: reserve
The common modifiers of this term further specify the type of risk to be mitigated. However, the specific meanings of these modifiers vary with different application fields. Such as managing reserves, emergency reserves and so on.
China's deposit reserve system is based on 1984. In the past 20 years, the deposit reserve ratio has undergone six adjustments. Since 1998, with the change of monetary policy from direct regulation to indirect regulation, China's deposit reserve system has been continuously improved; According to the needs of macro-control, the deposit reserve ratio was adjusted twice: once from 13% to 8% in March, 1998, and once from 8% to 6% in October, 20 199.
The deposit reserve policy is one of the three traditional monetary policy tools. Generally speaking, when the economy is overheated, the tendency of financial institutions to lend increases, and the loan risk caused by the inability to repay funds in the future also rises, the central bank will raise the reserve interest rate, and even raise the reserve ratio to cool the economy; On the contrary, the central bank will consider lowering the reserve interest rate or even the reserve ratio to stimulate banks' lending behavior. At present, the statutory reserve ratio of China's central bank is 6%, but in addition, commercial banks still have an excess reserve of 4-6%, which means that 10% to 12% of the deposits absorbed by commercial banks are deposited in the reserve account of the central bank for interest bearing, and are not used to provide loans to enterprises.