Title: The Impact of China's Foreign Exchange Reserves on Monetary Policy
Abstract: China's foreign exchange reserves have increased extraordinarily since the middle of 1990s,which has become the significant factor restricting the validity of monetary policy.This paper illustrates the theoretical relation between foreign exchange reserves and monetary policy in opening economy,analyzes the impact of foreign exchange reserves on the implementation of monetary policy,and discusses the conflict between foreign exchange rate policy and monetary policy.The result are as follows: To improve independence and flexibility of monetary policy,China should reform present foreign exchange administration system,enhance the open market operation and facilitate the equilibrium of the balance of payments.
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
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