in order to control the exchange rate, the central bank must intervene in the foreign exchange market to prevent fluctuations. This requires the central bank to have a large amount of foreign exchange reserves to operate in the foreign exchange market. Once the fixed exchange rate system is abandoned and the floating exchange rate is implemented, the central bank will not need to trade in the market and let the exchange rate fluctuate. Therefore, there is no need for large foreign exchange reserves.

China can actually control the RMB exchange rate precisely because we have a large amount of foreign exchange reserves. During the Asian financial crisis, Southeast Asian countries abandoned the fixed exchange rate and implemented floating exchange rate precisely because of insufficient foreign exchange reserves and could not intervene in the exchange rate.