Whether the foreign exchange of 654.38+00,000 yuan is exchanged for 6 million yuan or printed for 6 million yuan is an increase in the money supply. If the amount is too large, it will cause inflation. Therefore, one of the disadvantages of the combination of China's long-term large trade surplus and compulsory foreign exchange settlement policy is that it will cause excess liquidity of RMB and lead to inflation.

However, the assumption that the central bank has insufficient money in the title is untenable, and money is not printed casually.

Maintaining a high level of foreign exchange reserves is to cope with international financial risks, especially to adjust the exchange rate in the open market. It is impossible to have no foreign exchange reserves at hand. But this is a two-sided issue of currency issuance.