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Thursday, 23 October 2008
SAFE to Set up International Reserve Department
The State Administration of Foreign Exchange (SAFE) will replace the current reserve management department with an international reserves department with more detailed responsibilities, among which will be undertaking more macroeconomic research.
The State Administration of Foreign Exchange (SAFE) will replace the current reserve management department with an international reserves department with more detailed responsibilities, among which will be undertaking more macroeconomic research.
International reserves, mainly including forex and gold reserves, and ordinary drawing rights and special drawing rights in the International Monetary Fund, is a general term for all types of international reserve assets held by a country’s monetary authority.
The main responsibility of the international reserves department will be to undertake research on strategy and principles for international reserves operation and management, asset allocation, and risk management, and make relevant suggestions.
Responsibilities of the proposed department also include: studying both domestic and international economies, financial situations and long-term trends; raising suggestions on the proper scale of the country’s international reserves; undertaking research on strategy for the combination of international reserves and the country’s economic development and macroeconomic regulation; raising suggestions for the rational application of international reserves; and participating in relevant international financial activities.
According to SAFE’s website, the responsibility of the current department of reserve management is to “operate and manage SAFE’s forex reserve in accordance with the country’s principles and strategy, and to operate the forex deposit reserve of the People’s Bank of China”.
“Huge international reserves are important from the perspective of both macroeconomic regulation and financial security,” said Guo Tianyong, professor at the Central University of Finance and Economics, to China Business News. The present department of reserve management focuses more on business operation, such as how to invest, what to invest in, while the proposed department of international reserves would focus more on macroeconomic management. With the roiling US financial crisis, China is seeking a stable development of its own, and needs to raise the requirements for international reserve management.
Ding Zhijie, vice-dean of the College of Finance of the University of International Business and Economics, believes international reserves will become increasingly important, as China’s forex reserve is growing continuously. “We have to consider the relationship between reserves and the macroeconomic situation, and measure the strategic meaning of forex reserve to the economy at a higher level.
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SAFE to Set up International Reserve Department
23 October 2008
The State Administration of Foreign Exchange (SAFE) will replace the current reserve management department with an international reserves department with more detailed responsibilities, among which will be undertaking more macroeconomic research.
International reserves, mainly including forex and gold reserves, and ordinary drawing rights and special drawing rights in the International Monetary Fund, is a general term for all types of international reserve assets held by a country’s monetary authority.
The main responsibility of the international reserves department will be to undertake research on strategy and principles for international reserves operation and management, asset allocation, and risk management, and make relevant suggestions.
Responsibilities of the proposed department also include: studying both domestic and international economies, financial situations and long-term trends; raising suggestions on the proper scale of the country’s international reserves; undertaking research on strategy for the combination of international reserves and the country’s economic development and macroeconomic regulation; raising suggestions for the rational application of international reserves; and participating in relevant international financial activities.
According to SAFE’s website, the responsibility of the current department of reserve management is to “operate and manage SAFE’s forex reserve in accordance with the country’s principles and strategy, and to operate the forex deposit reserve of the People’s Bank of China”.
“Huge international reserves are important from the perspective of both macroeconomic regulation and financial security,” said Guo Tianyong, professor at the Central University of Finance and Economics, to China Business News. The present department of reserve management focuses more on business operation, such as how to invest, what to invest in, while the proposed department of international reserves would focus more on macroeconomic management. With the roiling US financial crisis, China is seeking a stable development of its own, and needs to raise the requirements for international reserve management.
Ding Zhijie, vice-dean of the College of Finance of the University of International Business and Economics, believes international reserves will become increasingly important, as China’s forex reserve is growing continuously. “We have to consider the relationship between reserves and the macroeconomic situation, and measure the strategic meaning of forex reserve to the economy at a higher level.
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