First, it is not conducive to the formulation and implementation of monetary policy. With China's capital account still under control, the impact of "hot money" is mainly manifested in the impact on the exchange rate. In order to maintain the stability of the exchange rate, the central bank has to buy a lot of foreign exchange funds with the continuous influx of "hot money", and the money supply has greatly increased. On the other hand, in order to curb the inflow of "hot money" and increase its cost, it is necessary to lower the RMB interest rate. As a result, the liquidity in the market is greatly enhanced, which may lead to inflation and overheating of the economy.

Second, it is not conducive to the balance of payments and the stability of the RMB exchange rate. The large-scale flow of "hot money" will increase the instability of the foreign exchange market, which is not conducive to the adjustment of the balance of payments, and may aggravate the imbalance of the balance of payments, cause exchange rate distortion, and even trigger a financial crisis.

Third, it is not conducive to the security and stability of the financial market and the banking system. "Hot money" is not effective capital. It entered our country for profiteering, and only left when the RMB appreciated. After its withdrawal, it will lead to a sharp drop in the stock market and the property market and increase the instability of the domestic financial market.