What is the function of foreign exchange reserves?
Foreign exchange reserves refer to the assets stored abroad by the state. Foreign exchange reserve is an important pillar of national economic development and has very special and important economic significance. The following are the functions and impacts of foreign exchange reserves:
Protect national economic security
In international trade, the trade balance supported by a country's foreign exchange reserves can ensure the stability of economic sources and maintain normal economic development in the event of an international financial crisis.
2. Ensure the balance of payments
Foreign exchange reserves can effectively ensure the balance of payments. When the balance of payments changes, foreign exchange reserves can effectively maintain the country's balance of payments and ensure the correct operation of the economy.
3. Support international investment
If the country wants to make international investment, then foreign exchange reserves are an indispensable part. Foreign exchange reserves can help international investment, and can also deal with the risks arising from international investment, ensure the security of the international investment environment and promote economic development.
4. Support international currency flows
Foreign exchange reserves can maintain the stable flow and normal operation of international money and ensure the stability of the national economy.
That's all. I hope it helps you.