Foreign exchange reserve: refers to the foreign currency held by a country's monetary authorities that can be used for external payment. A certain foreign exchange reserve is an important means for a country to adjust its economy and achieve internal and external balance. Benefits of increasing foreign exchange reserves: Generally speaking, increasing foreign exchange reserves can not only enhance the ability of macro-control, but also help maintain the international reputation of countries and enterprises, expand international trade, attract foreign investment, reduce the financing cost of domestic enterprises, and prevent and resolve international financial risks. Disadvantages of increasing foreign exchange reserves: 1. Foreign exchange reserves are characterized by holding financial claims expressed in foreign currencies, rather than putting them into domestic production and use. This leads to the problem of opportunity cost, that is, if the monetary authorities do not hold reserves, they can use these reserve assets to import goods and services and increase the actual resources for production, thus increasing employment and national income, while holding reserves will give up this interest. 2. The increase of foreign exchange reserves should correspondingly expand the money supply. If there are too many foreign exchange reserves, it will increase the pressure of inflation and increase the difficulty of monetary policy. 3. Holding too much foreign exchange reserves may also suffer losses due to exchange rate depreciation.