Foreign exchange reserves are assets held by the state and can be converted into foreign currency at any time. The main purpose of these assets is to realize international payment and trade. Many countries in the world will store foreign exchange, but these foreign exchanges are of little value at home and are still very valuable internationally. With the development of world economic globalization, countries will buy goods or technologies from other countries to meet people's needs. This is world trade, but their own currency is worthless in other countries, so they must store a certain amount of foreign currency to conduct normal trade. Although gold and silver can also be used as world trade currencies, after all, they are not as convenient as currency transactions, and their size and weight are also big problems. In the era when there is no foreign exchange reserve, when a person goes abroad for trade, he must first convert his own currency into equivalent gold and silver, then convert gold and silver into foreign currency, and then he can buy goods from which country through foreign currency. This is the original mode of trade. With foreign exchange reserves, money can be directly converted into equivalent value, which improves trade efficiency and reduces circulation costs.

As can be seen from the above trade patterns, there are two kinds of foreign reserves in the world at present, one is the national debt of other countries and the other is the gold reserve. The national debt of other countries will be deposited in the national bank that issues the national debt, while the gold reserve, as a fixed asset, will be deposited in the national reserve. The reserve of gold is of great significance to the national economy.

Of course, the role of foreign exchange reserves is very obvious. First of all, as an international trade, economic globalization has also accelerated people's use of global goods. The more frequent trade exchanges, the more foreign exchange reserves a country will have. Secondly, foreign exchange reserves can improve the country's position in the world economic circle. However, not all currencies can be used as foreign exchange reserves. Only countries with developed economies and relatively high GDP can issue currencies, such as US dollars, Japanese yen, RMB and Euro.