The Impact about China´s Foreign Exchange Reserves to Excess Liquidity and Countermeasures

At present, China is facing very serious excess liquidity, and this has brought some negative impacts to China´s economic development and financial stability. In this paper, the empirical study analyzes the impact of Foreign Exchange Reserves to Excess Liquidity. The results show that foreign exchange reserves have significant effect to excess liquidity, and this effect is persistent. Finally, based on the standpoint of foreign exchange reserves, this paper points out some countermeasures.