If the economy of an economy wants to run healthily, the currency circulation should correspond to the supply of materials, and there should be as much money as there are materials, otherwise there will be problems. With more money and less materials, inflation and currency depreciation will occur; With more materials and less money, there will be deflation and insufficient liquidity. If China's money and materials were in balance, and there were 10 trillion RMB and 10 trillion materials in the market, and the materials and money corresponded to each other one by one, then one kilogram of rice could be bought for each yuan. Suppose an American businessman, with $400 billion in his hand, comes to the Bank of China and asks to change it into RMB for domestic investment. China's central bank printed 3.2 trillion yuan and handed it over to American businessmen. Some people have said, why can't we give the original people to foreign investors, and why should we print new RMB to achieve the theoretical balance between money and goods? This is because the $400 billion brought by foreign investors is not money in China, but equivalent to commodities, which is equivalent to foreign investors bringing $400 billion worth of commodities to China and putting them on the China market. In order to cope with this $400 billion commodity, the central bank must issue a corresponding amount of RMB at the exchange rate, so as to achieve the balance between money and materials in theory. The equation of this balance is: 13.2 trillion RMB vs 10 trillion materials+400 billion USD. Some people say, why not "13.2 trillion RMB vs 10 trillion materials"? Because China Bank can buy back wheat and gold in the international market with 400 billion dollars, the equation can be balanced as: 13.2 trillion RMB vs 13.2 trillion materials. This is the theoretical basis of "for every increase in foreign exchange reserves of 1 USD, the central bank will issue a corresponding amount of RMB in China".