Chinese Foreign Exchange Reserves, Policy Choices and the U.S. Economy

Christopher Neely

No 2017-1, Working Papers from Federal Reserve Bank of St. Louis

Abstract: China is both a major trading partner of the United States and the largest official holder of U.S. assets in the world. The value of Chinese foreign exchange reserves peaked at just over $4 trillion in June 2014, but has since declined to $3.19 trillion as of August 2016. This very large decline is in foreign exchange reserves is unprecedented and some analysts have speculated that continued sales of these (mostly U.S.) assets might significantly impact the U.S. and global economies. This article explains the reasons for this large decline in official assets, what China?s policy choices are, and how these choices could affect the U.S. economy.

Keywords: Monetary policy; central banks and their policies; foreign exchange; current account (search for similar items in EconPapers)
JEL-codes: E52 E58 F31 F32 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2017-01-09
New Economics Papers: this item is included in nep-cna, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Chinese Foreign Exchange Reserves, Policy Choices, and the U.S. Economy (2017)
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DOI: 10.20955/wp.2017.001

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