exchange

Reserve), also known as foreign exchange reserve, refers to the foreign exchange part of the international reserve assets held by a government, that is, the creditor's rights held by a government in foreign currency.

. It is an asset held by the national monetary authority and can be converted into foreign currency at any time. In a narrow sense, foreign exchange reserves refer to a country's foreign exchange accumulation; Broadly speaking, foreign exchange reserves refer to assets denominated in foreign exchange, including cash, gold and foreign securities. Foreign exchange reserve is an important part of a country's international liquidity, which has an important influence on balancing international payments and stabilizing exchange rate.

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 local currency exchange rate.

The reasons for the continuous accumulation of foreign exchange reserves in China are as follows:

First, under the background of global balance of payments imbalance, the United States has become the world's largest borrower because of its persistent current account deficit; Most East Asian countries, including China, have become international creditors due to their persistent current account surpluses. The high foreign exchange reserve is only the external manifestation of global balance of payments imbalance in China.

Second, the arrangement of the international monetary system makes China face a "high savings dilemma".

Third, the continuous accumulation of foreign exchange reserves reflects the enhancement of China's trade competitiveness and attractiveness to foreign investment, and also reflects the long-term "biased" foreign trade, foreign investment and foreign exchange management policies.

Fourth, the RMB exchange rate deviates from the equilibrium exchange rate to a certain extent, distorting the prices of domestic and foreign products, traded and non-traded goods, RMB assets and US dollar assets, resulting in a sustained trade surplus and resource mismatch.

Fifth, the "inflated" foreign exchange reserves caused by short-term speculative capital inflows due to the expectation of exchange rate appreciation further amplified the pressure of RMB appreciation.

Sixth, the continuous accumulation of foreign exchange reserves shows that the central bank has increased its intervention in the foreign exchange market.