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Federal Reserve Bank of St. Louis
Working Papers
Chinese Foreign Exchange Reserves, Policy Choices and the U.S. Economy
Christopher J. Neely
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.


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Christopher J. Neely, Chinese Foreign Exchange Reserves, Policy Choices and the U.S. Economy, Federal Reserve Bank of St. Louis, Working Papers 2017-1, 09 Jan 2017.
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Keywords: Monetary policy; central banks and their policies; foreign exchange; current account
DOI: 10.20955/wp.2017.001
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