Foreign exchange (capital? Outstanding? For what? Foreign? Exchange) refers to the domestic currency invested by the central bank of the receiving country when purchasing foreign exchange assets. As the RMB is a non-convertible currency, foreign capital needs to be converted into RMB before it can be used in circulation. The country needs to invest a lot of money in exchange for foreign capital, and needs the country to buy foreign exchange in its own currency, thus increasing the "money supply" and forming foreign exchange accounts. In a narrow sense, foreign exchange refers to various means of payment expressed in foreign currency, which are generally accepted by all countries and can be used for international settlement of creditor's rights and debts. It must have three characteristics: affordability (assets that must be expressed in foreign currency), availability (claims that can be compensated abroad) and convertibility (foreign currency assets that can be freely converted into other means of payment). Foreign exchange in a broad sense refers to all assets owned by a country in foreign currency. What is the definition of this by the International Monetary Fund? Yes: "Foreign exchange is the creditor's rights held by monetary management organs (central bank, monetary management institutions, foreign exchange stabilization fund and Ministry of Finance) in the form of bank deposits, treasury bonds and long-term and short-term government securities."

Banks purchase foreign exchange to form local currency investment, and the purchased foreign exchange assets constitute the bank's foreign exchange reserves. Because the bank settlement and sale system consists of two market systems: the over-the-counter settlement and sale market and the inter-bank foreign exchange market, the foreign exchange supply and demand in both markets have regulatory rigidity. [ 1]? Therefore, the foreign exchange account has two meanings: first, the RMB investment formed by the central bank's acquisition of foreign exchange in the inter-bank foreign exchange market; 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 of the whole society is reflected in the foreign exchange item under the "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: 1, the central bank buys 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.