Foreign exchange reserves, also known as foreign exchange reserves, refer to foreign exchange assets held by central banks and other government agencies to meet the needs of international payment. The specific forms of foreign exchange reserves include: short-term government deposits abroad or other means of payment that can be cashed abroad, such as foreign securities, checks, promissory notes, foreign currency drafts of foreign banks, etc. It is mainly used to pay off the balance of payments deficit, intervene in the foreign exchange market and maintain the exchange rate of the domestic currency.

The principles of foreign exchange reserve management are as follows:

1, maintain the currency diversification of foreign exchange reserves to spread the risk of exchange rate changes;

2. According to the needs of imported goods, services and other payments, determine the quantity and term structure of various currencies in the reserve and the proportion of various monetary assets;

3. When determining the form of reserve currency assets, we should not only consider the rate of return of reserve assets, but also consider liquidity, flexibility and security;

4. Pay close attention to the exchange rate changes of reserve currencies and adjust the proportion of reserve assets in different currencies in time or irregularly.

Overview of foreign exchange reserve management principles

The management principle of national foreign exchange reserves can be summarized as "safety, flexibility, preservation and appreciation". The first is safety. Only under the premise of safety can there be a basis for maintaining and increasing value. However, since reserve assets are payment tools, they must be flexible if they are to be realized at any time, and both are indispensable. The security mentioned here is not only the prevention of currency exchange rate and interest rate risks, but also the prevention of liquidation, circulation and exchange risks. Therefore, in order to reduce the risk of reserve assets, when considering external payment, proactive measures should be taken to manage and operate reserves as financial assets. On the basis of maintaining the value, we should not only obtain the income of basic interest, but also strive to obtain higher investment income and realize the appreciation of reserve assets.