A report from a leading Beijing university has revived discussions about the \u201coptimal size\u201d of China\u2019s foreign exchange reserves \u2013 with a focus on US Treasuries \u2013 calling for its world-leading forex holdings to be trimmed to a \u201cmoderately ample\u201d level amid the drive to promote further international use of the yuan.<\/p>\n
The report, written by Sun Jiaqi from Renmin University\u2019s International Monetary Institute and issued on Friday, examined possible ways forward and their implications for China, which has hosted the world\u2019s largest forex reserves since February 2006.<\/p>\n
\u201cFor the yuan\u2019s internationalisation, maintaining moderately ample forex reserves can support the currency,\u201d Sun wrote.<\/p>\n
\u201cThat said, a gradual reduction will be inevitable, once the yuan matures and becomes more adopted globally as a medium of settlement and storage of value, supported by a large circulation abroad.<\/p>\n
\u201cAt that point, China may no longer need to hold excessive foreign currency assets as a precaution, since the yuan can replace many of the roles once played by foreign reserves.\u201d<\/p>\n
The report said that a desirable size for the reserves of an emerging market economy would be around 11.49 per cent of its gross domestic product, citing research by analysts from China Securities Depository and Clearing, and China Construction Bank.<\/p>\n","protected":false},"excerpt":{"rendered":"A report from a leading Beijing university has revived discussions about the \u201coptimal size\u201d of China\u2019s foreign exchange…\n","protected":false},"author":3,"featured_media":674339,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[9710,64,284360,74,284363,284362,79,131662,284359,22849,9401,284361,216550,284364,67,132,68,15393,100989,11039,167038,274339],"class_list":["post-674338","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-beijing","tag-business","tag-capital-account","tag-china","tag-china-construction-bank","tag-china-securities-depository-and-clearing","tag-economy","tag-five-year-plan","tag-foreign-reserves","tag-forex","tag-gold","tag-renmin-university","tag-state-administration-of-foreign-exchange","tag-sun-jiaqi","tag-united-states","tag-unitedstates","tag-us","tag-us-dollar","tag-us-treasuries","tag-wind","tag-yuan","tag-yuan-internationalisation"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116274368751086289","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/674338","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=674338"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/674338\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/674339"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=674338"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=674338"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=674338"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}