Updating approaches to the PRC’s foreign-exchange reserves management in the context of extraordinary risk

The major share of the total Chinese huge foreign-exchange reserves is the dollar assets. However, the excessive dollar prevalence leads to a situation when Chinese foreign-exchange reserves imperceptibly become a hostage to the American currency, which in turn can lead to the increased latent risks of these reserves loss, for instance, in the context of foreign policy problems or military conflicts. As set forth in the paper, the principal way to solve the above-mentioned problem is the internationalization of the Chinese national currency (renminbi). Nowadays, this country should start creating an emergency effective mechanism for protecting the foreign-exchange reserves from external sanctions as well as modernize these reserves management in terms of their sources and use. It will minimize the risks of foreign exchange assets loss and ensure the safety of Chinese foreign-exchange reserves.