First, the central bank's purchase of foreign exchange in the inter-bank foreign exchange market leads to RMB investment;

Second, the entire banking system (including central banks and commercial banks) in the OTC market and the inter-bank foreign exchange market should be considered in a unified way to invest RMB funds in the real economy.

Among them, the foreign exchange account of the former belongs to the purchase of foreign exchange by the central bank, which is reflected in the balance sheet of the central bank. The latter foreign exchange account belongs to the purchase of foreign exchange by the whole banking system (including the central bank and commercial banks), which is reflected in the RMB credit balance sheet of all financial institutions. ?

Corresponding to the two meanings of foreign exchange, under the strict bank settlement and sale system, the central bank purchases foreign exchange assets to form the foreign exchange reserves held by the central bank, while the entire banking system purchases foreign exchange assets to form the foreign exchange reserves of the whole society.

The change of foreign exchange reserves in the whole society is reflected in the foreign exchange item of "reserve assets" in the "balance of payments". The foreign exchange reserves we talk about every day are the foreign exchange reserves of the whole society.

The two meanings of foreign exchange account have different effects on domestic RMB currency and funds.

The specific performance is as follows:

1. The central bank purchases foreign exchange → forms the foreign exchange reserves held by the central bank → puts in the base currency;

2. The whole banking system purchases foreign exchange → forms foreign exchange reserves of the whole society → forms social capital investment.

The functions of foreign exchange reserves mainly include the following four aspects:

1, adjust the balance of payments and ensure external payment;

2. Intervene in the foreign exchange market and stabilize the local currency exchange rate;

3. Maintain international reputation and improve financing ability;

4. Enhance comprehensive national strength and resist financial risks.

A certain foreign exchange reserve is an important means for a country to adjust its economy and achieve internal and external balance. When the balance of payments is in deficit, the use of foreign exchange reserves can promote the balance of payments; When the domestic macro-economy is unbalanced and the total demand exceeds the total supply, foreign exchange can be used to organize imports, thus adjusting the relationship between total supply and total demand and promoting macroeconomic balance. At the same time, when the exchange rate fluctuates, foreign exchange reserves can be used to intervene in the exchange rate to stabilize the exchange rate. Therefore, foreign exchange reserves are an indispensable means to achieve economic balance and stability, especially when economic globalization is developing and one country's economy is more susceptible to the influence of other countries' economies.

Generally speaking, increasing foreign exchange reserves can not only enhance macro-control ability, but also help to maintain the international reputation of countries and enterprises, expand international trade, attract foreign investment, reduce the financing cost of domestic enterprises, and prevent and resolve international financial risks. The appropriate level of foreign exchange reserves depends on many factors, such as import and export, the scale of foreign debt, and the actual utilization of foreign capital. Foreign exchange reserves should be kept at a moderate level according to the comparison of income and cost and these conditions.