国际金融：Lecture 4The International Reserve Account

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1、4 The International Reserve Account and Chinas Forex Reserve ManagementMcGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-1The International Reserve AccountlThe international reserve account includes all the assets undertaken by the authorities to finance the

2、overall balance and intervene in the foreign exchange markets.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-2The International Reserve AccountlOfficial reserves assets is composed of nGoldnForeign exchange nSpecial Drawing Rights nReserve positions in the

3、 IMF McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-3Gold The Gold/International Reserve Ratio(2004)Countries% ratiocountries % ratioUSA58.5%Swiss48.9%Germany 48.5%Japan1.3%Italy 50.7%China1.7%McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies,

4、Inc. All rights reserved. 4-4Foreign Exchange ReservelA reserve currency should have the following propertiesnCan be changed to other reserve currencies freely.nAccount for important position in the International Monetary System.nHas stable purchasing power .McGraw-Hill/Irwin Copyright 2001 by The M

5、cGraw-Hill Companies, Inc. All rights reserved. 4-5Foreign Exchange ReserveMcGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-6Special Drawing RightslThe reserve assets created by IMF in 1970, mainly hold by IMF member countries. l15 official organizations can

6、 hold SDR, such as Asian development bank, African development bank and the Bank for international clearing.lIt is used as payment method between IMF member countries.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-7Special Drawing RightslOriginally SDR is

7、the weighted average of the basket of 16 currencies.lThe IMF adjusts the basket every five years to ensure those currencies are the most commonly used currency and the weighted average can reflect the importance of each currency in the international trade.McGraw-Hill/Irwin Copyright 2001 by The McGr

8、aw-Hill Companies, Inc. All rights reserved. 4-8Special Drawing RightslSince 1980, the value of SDR is determined by the weighted average of 5 currencies.lSince 1999, SDR is the weighted average of the following 4 currencies from the 5 industrial nations:nU. S. DollarnPound SterlingnJapanese YennEur

9、o (France)nEuro (German)McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-9Special Drawing RightsThe latest weight starts in 2011/1/1: Weight Rate Dollar ValueUSD 41.9% 1 0.419Euro 37.4% 1.3021 0.487GBP 11.3% 1.5246 0.172JPY 9.4% 0.01056 0.001 1.079McGraw-Hil

10、l/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-10Special Drawing RightslSDR is calculated daily based on the equivalent Dollar value of Dollar, Euro, Japanese Yen and Pounds quoted every noon in London market.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Compa

11、nies, Inc. All rights reserved. 4-11Special Drawing RightslStarting 1983 the interests of SDR is calculated every week based the weighted average interest rates of the five countries. Specifically, the weighted average of the three-month treasury bills of the US, UK and France, the three-month inter

12、bank interest of Germany, and the three month deposit rate of Japan.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-12Special Drawing RightslStarting 1970 the IMF has issued 22 billion US Dollar worth of Special Drawing Rights. 2/3 is hold by developed coun

13、tries.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-13Special Drawing RightslThe function of SDR:nThe IMF member countries can use it to return the loans to IMF.nCan used as payment method between IMF member countries.McGraw-Hill/Irwin Copyright 2001 by T

14、he McGraw-Hill Companies, Inc. All rights reserved. 4-14Reserve Position in the IMFlAlso called General Drawing Rights. Mainly composed of 25% of gold or foreign exchange a country pays the IMF, and 75% of the home currency.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All righ

15、ts reserved. 4-15Official Reserve AccountlFunctions:nSubsidize the BOP deficit, and maintain the external payment capability.nAs intervention assets, it adjusts the exchange rate of the home currency using foreign currency reserve.nIts an important credit for a country to borrow abroad. It also guar

16、antees the confidence in its home currency.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-16Official Reserve AccountslOfficial reserve accounts scale is determined by the following factorsnThe countrys relevant position in the international monetary system

17、nThe BOP situationnThe efficiency of other BOP adjustment measuresnThe countrys financing ability and the international circumstancesnThe forex exchange rate system.nThe degree of openness to the world.nThe opportunity cost for holding the official reserve.nThe economic development objectives.McGraw

18、-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-17Official Reserve AccountlThe principles for official reserve structurenLiquiditynSafetynProfitabilityMcGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-18Chinas Forex Reserv

19、e Management Until June 2014, Chinas forex reserve has exceeded 4 trillion U.S.Dollar.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-19Chinas Forex Reserve ManagementlDebate on Chinas forex reserve scalenSome think Chinas current reserve scale is unreasona

20、ble.nThe others hold that it is reasonable.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-20How to decide the forex reserve scale?Normally, the following ratio is used to decide whether one countrys forex reserve scale is reasonable.lReserve/Imports: 30-40

21、%lReserve/GDP: 8%lReserve/Foreign debt: 30%McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-21Chinas Forex Reserve ScalelHowever, most people hold that Chinas forex reserve scale is reasonable since nChinas special economic conditionsnIts the result of BCA a

22、nd BKA surplus, not the governments special policy.nA significant part of the reserve is foreign debt which should be return in future years.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-22Chinas Forex Reserve ScalelSome hold that Chinas reserve level is

23、too high and it has some adverse effects.nThe RMB appreciation pressure nThe possibility of inflationnThe high opportunity costsnThe foreign exchange and interest risksMcGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-23The Current Situation of Chinas forex r

24、eserve managementlA large part of the reserve is U.S.Dollar.lAbout 80% is used in purchasing US treasury bond.McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-24Chinas Forex Reserve ManagementlSome suggestions are raisednMake proper use of the reserve uEncourage foreign investmentuEncourage investment in resources, like petroleum, and mineralsnReduce the portion of USD and adjust the reserve structurenFurther promote the opening of the capital marketnPromote the foreign exchange system reform and fulfill the complete convertibility of RMB currency.