Foreign exchange reserve, also known as foreign exchange reserve, refers to the foreign exchange part of the international reserve assets held by a government, that is, the creditor's rights held by a government in foreign currency. It is an asset held by the national monetary authority and can be converted into foreign currency at any time.

The functions of foreign exchange reserves mainly include the following four aspects:

First, adjust the balance of payments to ensure external payment;

Second, intervene in the foreign exchange market and stabilize the local currency exchange rate;

Third, maintain international reputation and improve financing ability;

Fourth, enhance comprehensive national strength and resist financial risks.

Extended data:

Problems caused by China's high foreign exchange reserves;

( 1)? China's excessive foreign exchange reserves increase the opportunity cost: the high foreign exchange reserves greatly increase the opportunity cost and reduce the effective utilization of capital. Foreign exchange reserves are deposited in foreign banks in the form of deposits, if not for savings, but for foreign investment.

Can be used for import or investment, then the rate of return is much higher than the savings income, which constitutes the opportunity cost of foreign exchange savings. It can be seen that the more foreign exchange reserves, the greater the opportunity cost.

(2) The soaring foreign exchange reserves have affected the autonomy of monetary policy: under the condition of open economy, the change of a country's foreign exchange reserves is an important channel for money supply. A country's money supply is the amount of money issued by the central bank and then put into the market through various channels. Foreign exchange account is the currency invested by the central bank's foreign exchange reserves.

At the same time, foreign exchange reserves have the nature of high-energy currency, which can double the money supply through multiplier effect. When China's balance of payments continues to show a surplus, there is an oversupply in the foreign exchange market.

Baidu encyclopedia-foreign exchange reserve