Home The negative impact of higher-than-usual foreign exchange reserves

The negative impact of higher-than-usual foreign exchange reserves

As a sign of a countrys economic cashbackforexcalculatorOnline financial strength, cashback forex calculator Online cashbackforexpipcalculator cashback forex are the material basis for making up for the countrys balance of payments deficit, weathering financial storms, stabilizing the countrys exchange rate, and maintaining the countrys international credibility For developing countries, it is often necessary to hold higher-than-usual levels of foreign exchange reserves However, more foreign exchange reserves are not better than better, and the sharp increase in the size of Chinas foreign exchange reserves in recent years has had many negative effects on economic development The potential for economic growth is undermined by the fact that the inflow of foreign exchange reserves of a certain size represents an outflow of physical resources of a corresponding size, a situation that is not conducive to the growth of a countrys economy If the extraordinary growth of Chinas foreign exchange reserves continues, it will undermine the potential for economic growth How to make money with gold speculation expert free guidance bank gold and silver TD opening guide bank gold and silver simulation trading Software collects gold number desktop line price tool 2. bring carry loss according to conservative estimates, to investment profitability and foreign exchange reserves yield difference of 2%, if you have 600 billion U.S. dollars of foreign exchange reserves, the annual loss of up to more than 10 billion U.S. dollars if you consider the risk of exchange rate changes, this potential loss is even greater in addition, many countries foreign exchange reserves constitute the vast majority of U.S. dollar assets, if the dollar depreciates, the 3. There is a high opportunity cost loss China brings in about 50 billion dollars of foreign investment every year, for which the country has to provide a lot of tax benefits; at the same time, China holds about one trillion dollars of foreign exchange reserves, which are left idle so that, on the one hand, the national fiscal revenue is reduced, and on the other hand, the people save and borrow money for foreigners to spend, the potential opportunity cost of which Under the current foreign exchange management system, the central bank has the responsibility to repurchase foreign exchange funds without limit, so with the growth of foreign exchange reserves, the amount of foreign exchange reserves has been increasing the rapid growth of foreign exchange reserves has not only restricted the effectiveness of macro-control since 2004, but also weakened the effect of macro-control structurally, and further increased the pressure of RMB appreciation 5. affect the use of international preferential loans too much foreign exchange reserves will make China lose the International Monetary Fund (IMF) preferential loans according to the IMF regulations, countries with sufficient foreign exchange reserves not only can not enjoy the organizations preferential low-interest loans, but also must provide assistance to other member countries in balance of payments difficulties when necessary. 6. accelerate the inflow of hot money, which will trigger or accelerate the inflation of the country 7. hoard a large amount of foreign exchange, which will cause the loss of domestic tangible economic resources, whether it is exporting foreign exchange or issuing domestic cashbackforexprofitcalculator to purchase foreign exchange, which will create the purchasing power of domestic tangible economic resources, resulting in the loss of domestic tangible economic resources 8. push up the inflation of the national currency, the loss of resources and the massive issuance of Forcing the domestic production enterprises and the banking system to close down, exporting foreign exchange cannot buy back resources, which are realized by issuing domestic currency to inflate the profits of enterprises, in essence, the export costs of production enterprises are absorbed by inflation, which in the long run makes all the production enterprises in general fail to cover their expenditures, so that these enterprises The production materials held by these enterprises into foreign exchange reserves in the form of currency, resulting in the collapse, and the banks that survive on the basis of the economic profitability of enterprises will also fail due to the collapse of enterprises so that the loans lent can not be recovered 10. so that the central bank to generate huge exchange losses, as these losses need to be obtained through the unguaranteed issuance of domestic currency, absorbed by industrial and commercial enterprises and the banking system, forcing enterprises to reform through the shareholding system The shareholding reform of a large number of state-owned enterprises and wholly state-owned banks in China is because the enterprises cannot independently bear the exchange losses arising from the central banks massive hoarding of foreign currency and have to absorb private capital to share the losses in order to survive. Dilute the purchasing power of its currency, plundering the wealth of foreign exchange-holding countries to evade debt to create conditions This is the main reason for the formation of our central bank exchange losses 12. evaporate the accumulation of national currency, a large amount of inflation itself is the performance of the central bank to dilute the purchasing power of the national currency, but the central bank in diluting the purchasing power did not subsidize the holders of the equivalent of the new currency, thus the peoples wealth evaporated 13. The loss of sovereignty of the national currency is caused by moving the reserves of the national currency out of the country. The massive issuance of the national currency to buy foreign currency is characterized by the so-called one-way equivalent exchange, i.e., the use of the national currency to buy foreign currency, and the foreign currency issuing country will buy our goods into its country in exchange for the RMB, and after the sale to make up for the reserves of the foreign currency issuance, the countrys currency is returned to buy down its debts and the country cannot return because of the foreign currency hoard Resources, resulting in the issuance of a large amount of unfunded currency, thus losing control over the national currency and allowing its inflation, which means the loss of national monetary sovereignty

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