Hot money is hot money.

International hot money is a part of international short-term capital seeking profit opportunities around the world, also known as "international hot money", and its investment targets are mainly foreign exchange, stocks and their derivatives markets. International hot money has the characteristics of short stay time, sensitive response and strong concealment. According to the estimation of the International Monetary Fund, the amount of such funds currently active in the global financial market is more than $7.2 trillion. In recent years, the activities of international hot money are rampant. Has attracted worldwide attention.

according to the speculative degree, international hot money can be roughly divided into two types: one is general arbitrage, arbitrage or securities investment funds, which are not speculative. Its holders are mainly various funds, multinational companies and securities institutions. Its main body is various mutual funds, pension funds and insurance funds in developed countries. Most funds need to invest 15% of their funds abroad for profit and risk diversification, and inject 1% of the funds invested in foreign markets into emerging markets. The other is highly speculative funds, such as hedge funds in the United States, which are smaller in scale. This kind of capital directly impacts, manipulates or monopolizes a country's foreign exchange and stock market, causing market volatility and profiteering. The most famous is the Quantum Fund managed by Soros. In 1992, Soros sold off weak currencies such as the pound and lira, forcing the pound and lira to depreciate and then temporarily withdraw from the European monetary system, earning $1 billion for the Quantum Fund. Soros firmly believes that the financial market is flawed, and it will inevitably rise and fall, and it will be consistent, making the quantum fund one of the most unsuccessful funds in history. If the 1-dollar quantum fund in 1969 is reinvested, it will earn more than 2 million dollars by 1997.

the development of international hot money is caused by many factors. (1) in the 197s and 198s, governments all over the world completely relaxed financial control and lifted the restrictions on the inflow and outflow of capital. Make the formation of large-scale international hot money possible; (2) The new technological revolution has accelerated the spread of financial information all over the world, greatly reduced the cost of international allocation of funds, and increased the flow speed of capital owners; ③ Financial innovations represented by forward foreign exchange, currency swap and interest rate swap, interest rate option, forward interest rate agreement and floating rate notes provide new investment varieties for international hot money, reduce transaction costs and create new market operation means and profit opportunities; (4) The development of post-war world economic integration and the growth of multinational corporations and banks have promoted the development of foreign investment. These factors have accelerated the process of global integration of financial markets and greatly increased the total amount of global international capital flows. In 1988, the total amount of international capital flows reached $53.5 billion, and in 1992 it reached $69.7 billion. Accompanied by this, the scale and influence of international hot money are also growing.

the impact of international hot money on a country's economy has two basic forms. One is "attraction-flight". When a country's economy is overheated, in order to curb inflation, the monetary management authorities implement high interest rates, attract a large number of international hot money inflows, engage in arbitrage, arbitrage or investment activities, force its currency to appreciate, and trigger a foreign trade deficit. At the same time, the prices of securities and real estate are also rising, forming a "bubble economy". The overvalued market value and the deteriorating trade situation have caused the psychological expectation of currency depreciation in the foreign exchange market, triggered the outflow of capital (including international hot money), and further devalued the currency, forming a vicious circle. When the currency depreciated to a certain extent, foreign capital in the securities market and real estate market began to flee, prices fell and the economic bubble burst. The other is "deliberate speculation". When international hot money discovered the profit opportunities in a country's foreign exchange market or securities market, it used a variety of financial means such as credit, futures and spot to mobilize human capital and engage in speculative activities. The impact on the pound and lira in 1992 was a typical case of deliberate speculation. The Mexican financial crisis in 1994 and the Southeast Asian financial crisis in 1997 were the results of the combined use of two kinds of international hot money.

we should have a comprehensive and objective understanding of the harmfulness of international hot money. The financial crisis caused by the impact of international hot money has caused great difficulties to the economy of the host country. In countries with financial crisis, the economic growth rate has generally declined, and unemployment and inflation have risen. (2) Every country that has caused financial crisis due to the impact of international hot money has problems in its own economy, especially its financial system is unable to withstand the sharp decline in real estate, stock market and foreign exchange market caused by the massive withdrawal of foreign capital.

At present, China's RMB exchange rate has remained basically stable against the US dollar for a long time, with a large spread at home and abroad. Some international hot money has penetrated into China by means of current account, etc., seeking spreads and exchange differences. In order to prevent the excessive impact of international hot money on China, it is very necessary to strictly control the capital account at present. We should continue to use short-term foreign debts, but we must control them at a reasonable scale. It is necessary to improve the formation mechanism of interest rates and enhance their representativeness. In the long run, the liberalization of finance and service industry is one of the goals pursued by GATT, and adhering to capital control will face increasing international pressure. Therefore, the long-term and fundamental policy to prevent the serious consequences of international capital shocks is to maintain the healthy development of the domestic economy.