The so-called foreign exchange deposit reserve refers to the foreign exchange deposits absorbed by financial institutions are deposited by the People's Bank of China in a certain proportion, which is similar to the deposit reserve ratio. The foreign exchange deposit reserve ratio refers to the ratio between the foreign exchange deposit reserve paid by financial institutions to the People's Bank of China and the foreign exchange deposits absorbed by them.

Another way of saying it is that you deposit foreign exchange in the bank, and the bank can lend some of it for profit and give some to the central bank. This is the mandatory ratio determined by the central bank. This part of the deposit reserve handed over to the central bank divided by the funds you deposit in the bank is the deposit reserve ratio.

Deposit reserve is a monetary fund prepared by financial enterprises to meet customers' withdrawal of deposits and fund settlement.

Reserve refers to the deposits deposited by financial institutions in the central bank, which is used to ensure the needs of customers to withdraw deposits and settle funds, including foreign exchange deposit reserve. The ratio of the deposit reserve required by the central bank to its total deposit is the deposit reserve ratio. Generally speaking, raising the deposit reserve ratio is an important means to shrink the base currency.

Internationally, deposit reserve mainly includes three parts: one is cash on hand; Second, deposits deposited in the central bank according to a certain proportion of total deposits or total liabilities are called statutory reserves; Third, the part of the central bank deposit that exceeds the statutory reserve is called excess reserve. In this law, the scope of deposit reserve is limited to statutory reserve.

Foreign exchange reserves are somewhat similar to deposit reserves, and banks also need to hand them over to the central bank in proportion.

China has a foreign exchange deposit reserve ratio and RMB has a reserve ratio. Foreign exchange reserves can only be paid in foreign exchange, and local currency reserves can be paid in local currency, which is generally not allowed to cross. It can be simply understood as a set of local currency credit expansion system and a set of foreign currency credit expansion system. Credit expansion in local currency comes first with loans, and credit expansion in foreign currency comes first with deposits.

For example, Zhang San earned a sum of 100 dollars in foreign exchange from abroad and took it back to the bank to form a foreign exchange deposit (no settlement). Then a bank needs to leave a reserve of $5 for the central bank, and the rest can invest in foreign currency to earn a spread.