Monetary Sterilization in China Since the 1990s: How Much and How Effective?
China is the largest reserve holder among developing countries, having amassed over US$ 600 billion of reserves by end 2004. Given the potential liquidity overhang concerns in China due to the rapid reserve buildup, the PeopleÂ’s Bank of China (PBOC) has actively attempted to sterilize these inflows using a combination of market-based and administrative measures to mop up the excess liquidity. This paper focuses on the magnitude and sources of reserve buildup in China as well as their monetary consequences since the 1990s. It undertakes an econometric investigation to assess the de facto extent of monetary sterilization by estimating a set of simultaneous equations explicitly derived from an optimizing framework to examine the relationship between net domestic assets and net foreign assets.
|Date of creation:||Jun 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+ 61 8) 8303 5672
Fax: (+ 61 8) 8223 1460
Web page: http://www.adelaide.edu.au/cies/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:adl:cieswp:2005-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dmitriy Kvasov)
If references are entirely missing, you can add them using this form.