International reserves are government-owned reserve assets that can be directly used for external payments. International reserve assets mainly include gold reserves, foreign exchange reserves, reserve positions in the International Monetary Fund, special drawing rights and the use of fund credit. Among them, foreign exchange reserves are the main reserve assets in China. Foreign exchange reserve refers to the official reserve currency held by various countries, which can be freely controlled and freely convertible. It is the main component of a country's international reserves and the main symbol of the country's macro-control strength. According to the Law of the People's Bank of China, the People's Bank of China holds, operates and manages the national foreign exchange reserves. The People's Bank of China authorized the State Administration of Foreign Exchange to manage the national foreign exchange reserves on its behalf. The functions of foreign exchange reserves mainly include the following aspects: First, adjust the balance of payments and ensure external payment. Foreign exchange reserves are used for international settlement. When there is a deficit in the balance of payments, foreign exchange reserves can be used to make up for it. This temporary measure has bought time for preparing other adjustment measures, so it is called the "buffer" of the balance of payments. The second is to intervene in the foreign exchange market and stabilize the local currency exchange rate. When the supply and demand of foreign exchange in the foreign exchange market are unbalanced, a country's monetary authorities buy and sell foreign exchange in the foreign exchange market to prevent the local currency exchange rate from rising or falling excessively. Foreign exchange reserve is an important means for a government to intervene in the foreign exchange market and stabilize the exchange rate of local currency. For example, when the domestic currency is under the pressure of depreciation, it can sell the foreign exchange in the domestic reserves to increase the foreign exchange supply in the foreign exchange market and maintain the exchange rate stability. The third is to safeguard the country's reputation and improve its external financing ability. With the development of world economic exchanges, the global foreign exchange reserve assets are increasing day by day, and foreign exchange reserves have also become an important reference for evaluating national risks, and are often used as a guarantee for countries to borrow from abroad. If the borrowing country has abundant foreign exchange reserves, it shows that it has good solvency, and domestic enterprises and institutions can obtain various loans more easily or even at lower cost when financing in the international market. When investing in this country, foreign investors feel safe about repatriated profits and are willing to actively inject capital, thus promoting its economic development. The fourth is to enhance comprehensive national strength and ability to resist risks. When evaluating a country's comprehensive national strength, foreign exchange reserves are usually regarded as an important indicator. The increase of foreign exchange reserves also means the enhancement of a country's external solvency and comprehensive national strength. In addition, in some countries in transition, foreign exchange reserves are often used as reform funds to cope with possible payment difficulties. Under the premise of moderate reserve scale, governments of all countries follow the "three principles" of organically combining safety, liquidity and profitability to manage and operate foreign exchange reserve assets and arrange the structure of foreign exchange reserve assets. Security means that foreign exchange reserves should be deposited in countries with political stability and strong economic strength, international big banks with high reputation or national debts of developed countries. Always pay attention to the political and economic trends of these countries and banks; We should choose currencies with low risk and relatively stable currency value, pay close attention to the balance of payments and economic situation of these currency issuing countries, predict the exchange rate trend, adjust the currency structure in time, and reduce the exchange rate and interest rate risks; There is also investment in safer credit instruments, such as high-credit government bonds or state-guaranteed institutional bonds. Liquidity refers to ensuring that foreign exchange reserves can be cashed at any time and used for payment, and redemption can be realized at the lowest cost. Generally speaking, cash and treasury bonds are more liquid than medium and long-term treasury bonds. Profitability means that under the premise of ensuring safety and liquidity, through the analysis and prediction of market trends, we can determine a scientific investment portfolio, seize market opportunities, invest and trade assets, and realize the preservation and appreciation of reserve assets.