Factors Affecting China's Foreign Currency Deposits and Loans: an Empirical Evidence

摘要

With the continuous appreciation of Renminbi, the difference of the interest rates between the local currency and the foreign currency,China's foreign currency deposits has been reducing and foreign currecy loans have been increasing. Commercial banks' loan-deposit ratio has been expanding, resulting in shortage of foreign currency and the emergence of foreign currency liquidity risks. The Central Bank's tightening monetary policy is also affected.Empirical studies also support that the RMB exchange rate correlates negatively with foreign currency loans but positively with foreign currency savings deposits. Therefore, reforms of foreign exchange rate regime, interest rate mechanism as well as auxiliary systems shuold be further deepened.