The foreign exchange account is the domestic currency invested by the bank when purchasing foreign exchange assets. Banks purchase foreign exchange to form local currency investment, and the purchased foreign exchange assets constitute the bank's foreign exchange reserves. Banks pay foreign exchange in the process of purchasing foreign exchange assets, and the purchased foreign exchange assets are collectively called foreign exchange reserves. Foreign exchange accounts are mainly divided into two levels: the central bank and the ordinary banking system. The central bank purchases foreign exchange assets based on monetary policy, and general commercial banks pay their own currencies, which belongs to foreign exchange.

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. "Foreign exchange account" correspondingly has two meanings:

First, the central bank's purchase of foreign exchange in the inter-bank foreign exchange market led to the release of RMB.

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 system of bank settlement and sale of foreign exchange, the central bank purchases foreign exchange assets to form the foreign exchange reserves held by the central bank, while the whole 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 as follows:

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.