According to the degree of convertibility, foreign exchange can be divided into freely convertible foreign exchange, limited freely convertible foreign exchange and bookkeeping foreign exchange.

Freely convertible foreign exchange refers to foreign exchange that can be freely used and traded in international settlement and international financial markets.

Limited freely convertible foreign exchange refers to foreign exchange that cannot be freely converted into other currencies or paid to a third country. Many currencies in the world belong to this category, including RMB.

Bookkeeping foreign exchange, also known as clearing foreign exchange or bilateral foreign exchange, refers to foreign exchange deposited in bank accounts designated by both parties and cannot be converted into other currencies or paid to third countries.