The Media Said Foreign Exchange Reserves Should Be Used Overseas For &Nbsp; It Is Not Suitable For Free Distribution To The Public.

Whose money is the foreign exchange reserve?

Many people still remember the slogan "export for foreign exchange", which has been booming in recent years.

As a result, there is a view that China's foreign exchange reserves are domestic tens of thousands of enterprises or individuals with real goods, energy, resources and hidden environmental costs in return, is the ordinary people's "sweat and money".

Whose money is the foreign exchange reserve?

To answer this question, we must first understand how our foreign exchange reserves came from.

Chinese enterprises and individuals export goods or services to earn foreign exchange, such as dollars, and then sell part or all of these foreign exchange to banks for Renminbi.

Foreign investors in China often need to convert some or all of their foreign exchange funds into Renminbi and sell foreign exchange to banks.

The bank will sell the rest of its foreign exchange in the interbank foreign exchange market after retaining a certain amount of foreign exchange for its daily business.

Once foreign exchange is purchased by the central bank, it becomes the state's foreign exchange reserve.

It should be pointed out that China has no longer implemented the mandatory foreign exchange settlement system, and the foreign exchange earnings earned by enterprises such as exports can be retained or sold to banks on the basis of their business needs.

It can be seen from this process that enterprises and individuals are not foreign currencies.

"For example, as of the end of 6 this year, the balance of foreign exchange reserves was US $31975, and the corresponding central bank liabilities were 22 trillion and 600 billion yuan, that is to say, nearly 3 trillion and 200 billion U.S. dollars of foreign exchange reserves were purchased by the central bank for 22 trillion and 600 billion yuan.

The 22 trillion and 600 billion yuan is ultimately reflected in the form of cash in circulation, all kinds of bank institutions in central bank deposits, central bank bills and other central bank liabilities, "Ding Zhijie, President of the school of finance, foreign trade and Economic University, said (micro-blog).

Thus, first of all, foreign exchange reserves are the central bank's money, and because it is formed by the central bank in debt.

Secondly, foreign exchange reserves represent national wealth, but it can not be understood as the "blood and sweat money" of the Chinese people in a general sense.

From the source, part of the foreign exchange reserve comes from exports. This is the result of the hard work of domestic enterprises or individuals. It can be said that the Chinese people are "hard-earned money". This wealth is held by the central bank in the form of foreign exchange reserves, and the people are held in the form of equivalent Renminbi.

"Foreign exchange reserves also come partly from capital inflows such as foreign investment. This part is probably not the" sweat and money "of the Chinese people, Ding Zhijie said.

There is also a view that foreign exchange reserves are the "invoice" and "buy" of the central bank. However, the central bank sends out a unit currency, and the currency in the hands of the central people will be derogated. The more it is issued, the more it will be derogated. This is equivalent to the central bank's imposition of seigniorage on the whole nation.

So in the final analysis, foreign exchange reserves are bought by the people.

"The misuse of seigniorage is misused here," Zhao Qingming, senior research fellow of 4.62,0.00,0.00%, micro-blog, admitted that under the commodity money system such as gold and silver standard, the difference between the value of money and its intrinsic value is seigniorage.

For example, if a copper coin with a value of 1 yuan, the cost of casting (intrinsic value) is 0.3, then seigniorage is 0.7.

"The central bank buys banknotes through the purchase of foreign exchange. Although the printing cost of banknotes is negligible, there is no seigniorage because the intrinsic value of paper money is equivalent to the foreign currency equivalent to its currency value."

"As for the new currency, which will lead to the depreciation of the original currency, it is possible to depreciate in the closed economy.

In the open economy, the new currency can be exchanged for foreign exchange imports. There will be no more problems between you and me than money, and it will not lead to the depreciation of the original currency, "Zhao Qingming analyzed.

Ding Zhijie believes that the new money will eventually be held by enterprises and residents, which are also a form of wealth, so the new currency can not be regarded as "taxing".

How much foreign exchange reserves are there?

According to the traditional view, the scale of China's foreign exchange reserves has far exceeded the minimum warning line. So many foreign exchange reserves are running by the traditional economic development mode. Since the reform of the RMB exchange rate, China's foreign exchange reserve growth has entered a "fast lane": in February 2006, it surpassed Japan in the world's first place; in October of the same year, it broke through the $1 trillion mark; in April 2009, it exceeded 2 trillion dollars; in March 2011, it exceeded 3 trillion dollars.

In the face of this steep rise curve, the public can not help asking: is foreign exchange reserves too large?

The amount of foreign exchange reserves held by a country is moderate. There is no uniform standard in theory and practice.

Internationally, it is only defined the low limit of external reserves, but there is no consensus on high limits.

"The traditional view is that foreign exchange reserves should not be less than 3 months of imports, 10% of GDP and 30% of foreign debt, and by the end of last year, China's foreign exchange reserves amounted to 2 trillion and 850 billion dollars, which could meet the import value of 22.5 months, equivalent to 48.44% GDP and 5.2 times of foreign debt.

According to the traditional view, China's foreign exchange reserves have far exceeded the minimum warning line, the total volume is relatively abundant, but how much is appropriate, there is no conclusion at present. We need to take into account the macroeconomic conditions of our country, the degree of economic openness, the ability to use foreign capital and international financing, the maturity of the economic and financial system, and so on, "Ding Zhijie said.

For example, the status quo of China's foreign exchange reserves is "remittance to the country". Compared with the foreign exchange reserves of 3 trillion and 200 billion dollars, the foreign exchange deposits of enterprises and residents are only about 250 billion dollars, and the vast majority of foreign exchange assets are in the hands of the government.

In developed countries, most of them are "remittance to the people". In 2010, the foreign exchange assets of Japan, Germany, Britain and the United States were as high as 4 trillion and 990 billion, 6 trillion and 910 billion, 12 trillion and 780 billion and 15 trillion and 400 billion dollars respectively.

Although the official foreign exchange reserves of these countries are less than that of our country, the foreign exchange assets of these countries are far more than that of China.

China is a large developing country, and maintaining sufficient foreign exchange reserves is of great significance for ensuring international solvency, improving risk response capabilities, and safeguarding national economic and financial security.

However, a huge amount of foreign reserves is like a "double-edged sword", which also brings four "disadvantages":

It is not conducive to the effectiveness of macroeconomic regulation and control.

The central bank buys foreign exchange to form reserves and must put in the equivalent value of the Renminbi (called foreign exchange). Therefore, the rapid growth of foreign exchange reserves also means that the central bank's passive investment in RMB is increasing at a high speed. If it can not be hedged and recovered in time, it will inject too much liquidity into the market and increase the risk of inflation pressure and asset bubble.

It is not conducive to creating a good external environment.

The rapid growth of foreign exchange reserves will cause international attention to China's trade situation and RMB value, and easily lead to disputes.

It is not conducive to economic restructuring.

At present, foreign exchange has become the main way of currency issuance. Over the years, there will be more funds in the eastern region with more foreign exchange earnings and less foreign exchange earnings. The central and western regions have less capital, and the second industries that generate more foreign exchange have more capital and less funds for the third industries.

It is not conducive to maintaining value and increasing value.

The spread of the debt crisis in Europe and the United States and the turmoil in the international financial market will bring challenges to the preservation and appreciation of huge foreign reserves.

What needs to be emphasized is that so much foreign exchange reserve is not our deliberate pursuit, but the result of the operation of the traditional economic development mode.

In economics, there is a national income identity: Savings - Investment = export - import.

Since the reform and opening up, as China's consumption rate continues to decline, the savings rate continues to rise. According to the identity equation, when the savings rate exceeds investment rate, exports will inevitably be greater than imports, thereby forming a favorable balance of trade, triggering the influx of foreign exchange.

"The surge in foreign exchange reserves is rooted in the long run of domestic demand, especially the lack of consumer demand and over reliance on exports, and it is still a long time to change this way of economic development," Zhao Qingming said.

In addition, for a long time, China's "foreign policy" is limited to "import (export)" and "strict inflow (outflow)" on foreign exchange management policy. As a result of the appreciation expectation of RMB, enterprises and residents generally do not want to hold or retain foreign exchange and other factors, which also boosted the rapid growth of foreign exchange reserves.

Experts believe that the way to deal with the surge of external storage is to slow down the incremental part of the system, and make good use of the stock. The analogy is to turn the intake tap off and turn the tap up, so that the water level in the pool will not rise too fast.

As far as the increment is concerned, we should speed up the pformation of the mode of economic development, and strive to expand domestic demand, especially consumption demand according to the idea of "expanding domestic demand, adjusting the structure, reducing favorable balance and promoting balance".

Can foreign exchange reserves be divided?

Giving freely to the public will lead to serious consequences such as inflation and central bank bankruptcy.

Some people say that in recent years, the governments of Hongkong and Macao often distribute thousands or even tens of thousands of cash to all citizens, commonly known as "sugar pie".

Since China's foreign exchange reserves are too bad, can we divide them into the public?

Let's try to deduce what the consequences will be if we divide our foreign exchange reserves.

First of all, on the balance sheet of the central bank, foreign exchange reserve assets correspond to the equivalent value of RMB liabilities. If the assets are divided into assets and immovable liabilities, the result is that the central bank will be insolvent and fall into bankruptcy.

Secondly, if the people "divide" into foreign exchange reserves, he can only convert these foreign exchange into Renminbi to spend in China, which will form the "two throw in" of RMB: when it sells foreign exchange to the bank, it will form a launch, and these foreign exchange will be sold two times in the interbank foreign exchange market and eventually acquired by the central bank.

The consequence of the "two launch" is that the spamming of Renminbi will cause serious consequences such as inflation.

"The money used by the Hong Kong and Macao governments to" distribute sugar "comes from the fiscal surplus, which is the net asset of the government and can be used for distribution.

In fact, despite the fact that Hongkong's foreign exchange reserves have always been among the highest in the world, it has not carried out the so-called "sugar pie", Zhao Qingming said.

Others say that foreign exchange reserves should be "taken from the people and used by the people". If it is not appropriate to directly distribute to the public, is it possible to divestiture part of the foreign exchange reserves and establish a sovereign pension fund to enrich our social security system?

The use of foreign exchange reserves to build sovereign pension funds abroad has existed for decades, such as the "government Global Pension Fund" established in Norway in 1990.

It should be said that the free foreign exchange reserve will enrich the social security system, which has the same consequences as free distribution to the public.

"However, it is possible to consider buying some foreign exchange reserves by way of issuing bonds and establishing a sovereign pension fund," Ding Zhijie said.

In fact, the investment income of China's foreign exchange reserve is turned over to the public finance, which can be used for various purposes including social security.

Zhu Rongji, a former premier of the State Council, revealed in the newly published "record of Zhu Rongji's speech": "last year (2002), national finance was very difficult. The Ministry of Finance had already made a good balance between revenue and expenditure. By the end of the year, it had suddenly jumped out of an income of 40 billion 700 million yuan, which was mainly the earnings of the foreign exchange reserves.

I decided that the money should not be used first and put it all into the national social security fund.

Zhao Qingming said that there are mainly two ways to form foreign exchange reserves in the world: one is that the central bank has invested RMB to buy foreign exchange to form foreign reserves, such as China, and the other is to form foreign reserves from financial contributions. Among them, Japan and other countries have purchased foreign exchange from foreign exchange by issuing special treasury bonds, and countries such as Norway and Singapore have purchased foreign exchange from the net surplus with financial reserves.

"Only the Norway and Singapore mode can be used for free, because this is a net financial surplus, and it should not be liability.

The Japanese model is not free to use because of its external liabilities.

Speaking of this, the two principles of "flower" China's foreign exchange reserves are also clear: first, paid use; first, overseas use, "flower" within the territory will lead to RMB "two times".

Experts believe that we should actively explore ways to use foreign reserves to support domestic economic development, such as importing domestic scarce energy and resources, forming energy and resource reserves, and supporting domestic enterprises to "go out" and expand foreign investment.

Some experts have put forward bold ideas.

"Foreign exchange reserve can not be used in principle, but because a large part of the currency issued by the central bank is precipitated, there is no pressure to pay, and part of the foreign exchange reserve, which is used to support domestic economic development and improve people's livelihood, will not bring too much risk.

In the future, we can make some attempts in this area, "Ding Zhijie said.

Is foreign exchange reserve investment worthwhile?

Holding US Treasury bonds is not the best option, but the realistic choice under the existing conditions. We should promote the diversification of foreign exchange reserve assets in a timely and steady manner.

According to the US Treasury report, China is the largest holder of US Treasury bonds.

In the context of the US debt rating downgrade and the depreciation of the US dollar, is it increasingly risky for foreign exchange reserves to hold such a large amount of US Treasury bonds?

China's foreign exchange reserves hold treasury bonds as a market investment behavior, which is dynamically adjusted according to market conditions.

The industry believes that, in a sense, holding the US Treasury bonds is not the best option, but the realistic choice under the existing conditions.

On the one hand, the international financial crisis has not shaken the dominant position of the US dollar in the international monetary system, and for a long time, it can not find any asset that can replace the US dollar.

In fact, the US Treasury bond is still the largest, the best quality, the best liquidity and the best reputation in the world.

"The more volatile the situation is, the more the dollar assets will be" safe haven ".

In the near future, as the European debt crisis has started to rise again, the US Treasury bonds are once again sought after by hedge funds, with a low yield, indicating a large number of global buyers, "Ding Zhijie said.

On the other hand, other currency bonds have little market capacity or are not welcome locally.

"In the eurozone treasury bonds, the best is German government bonds, but the scale is only 1/5 of the US, and the German national savings rate is higher. The national debt is purchased by the citizens themselves, leaving little room for foreign funds.

Looking at Japan's national debt, Japan's national savings rate is higher, its ability to absorb foreign funds is weaker, and the Japanese government's debt ratio has exceeded 200% of GDP ", Zhao Qingming analysis.

As for gold, silver and other precious metals and oil, iron ore and other international bulk commodities, in China's foreign exchange reserves portfolio has included related investments.

These commodities and energy resources are volatile, relatively limited in market capacity, relatively high in paction and storage costs, and are not suitable for large-scale foreign investment. Otherwise, they may push up their market prices, but are not conducive to the consumption and economic development of China.

"Some people say that since there is no best plan, the bank can simply save the bank.

But banks are not only less profitable, but also abroad, the possibility of banks going bankrupt is much higher than the possibility of government bankruptcy, rather than buying Treasury bonds, Zhao Qingming said.

However, experts also believe that we should pay close attention to the trend of the world economy, international finance and foreign exchange market, and promote the diversification of foreign exchange reserve assets in a timely and steady manner, so as to minimize the negative impact of fluctuations in international financial markets and better realize the value of foreign reserves.

"Although we can not deny the rationality of holding US dollar assets, we can not ignore the possible problems, that is, whether the holdings of US dollar assets are excessive and too many risks.

The downgrade of US debt shows that in the past we thought that assets without risks were actually risky, "Ding Zhijie said.