(1) The scope of a country's international reserves and the role of its currency in the international monetary system. If a country is a member of the International Monetary Fund and participates in the allocation of special drawing rights, its international reserves include not only gold and foreign exchange reserves, but also IMF reserve positions and special drawing rights, which not only expands the scale of its international reserves, but also increases its international liquidity; On the other hand, it can ease the demand for foreign exchange reserves, so that the holdings of foreign exchange reserves need not be too much. If a country's currency is the main international reserve currency, it has an advantage in adjusting the imbalance of international payments and making international payments-it can repay foreign debts in its own currency. Therefore, there is no need for reserve currency issuers to maintain excessive international reserves. As for its strong economic strength, sustained balance of payments surplus and abundant reserve assets, it is another matter.

(2) The scale and stability of balance of payments flow. A country's balance of payments has a decisive influence on its reserve demand, and it is also the most important factor to determine the appropriate scale of a country's international reserves. The first is the stability of its trade balance. If the supply elasticity of export commodities and the demand elasticity of the sales market are both greater than 1, while the demand elasticity of imported commodities is less than 1, it shows that its foreign trade balance is relatively stable; If its import and export are basically balanced or slightly exceeded, there is no need to consider international reserves; If the supply elasticity of export commodities is less than 1 and the demand elasticity of import commodities is greater than 1, it indicates that foreign trade conditions are poor and sufficient foreign exchange reserves need to be maintained. Secondly, look at the status and stability of the balance of payments. Generally speaking, if a country has a sustained balance of payments surplus (current account 10 capital account), the demand for international reserves is very small; On the other hand, if a country's balance of payments often appears deficit, the demand for international reserves is even greater; In the case of unstable balance of payments, the appropriate reserve level can be determined according to the frequency of deficit and other optional adjustment means. In short, the causes, nature and degree of a country's international balance of payments imbalance, as well as the number and advantages and disadvantages of the adjustment measures available, will determine how much international reserves are needed in the adjustment process.

(3) The application and effectiveness of other balance of payments adjustment methods. If a country implements strict foreign exchange control or trade control, it can effectively control the flow of imports and foreign exchange funds, and the demand for foreign exchange reserves is relatively small, but on the other hand, it also shows that its international reserve stock is insufficient.

(4) The size of a country's international financing capacity and its international environment. The external financing ability of a country (mainly developing countries) is mainly manifested in the following aspects: the ability to obtain loans from foreign governments and international financial organizations; The ability to obtain foreign commercial loans; International bond markets's financing ability. If a country has a high credit rating, can obtain loans from foreign governments and international financial institutions quickly and conveniently, and the sources of loans are stable and the conditions are good, or the country has strong financing ability in the international financial market, it does not need to hold too many international reserve assets; On the other hand, if a country's credit status is poor and its international financing ability is low, it should maintain sufficient international reserves.

Usually, the appropriate scale of a country's international reserves is between the regular reserves and the insurance reserves. The so-called regular reserve refers to the reserve necessary to ensure a country's normal economic growth without being affected by the shortage of reserves, which is the lower limit of a country's international reserve; The so-called insurance reserve refers to a country's reserve of actual resources that can not only make up for the balance of payments deficit, but also ensure the domestic economic growth, which is the upper limit of a country's international reserve. Monetary authorities in various countries conduct flexible management and optimal allocation within this scope according to their specific conditions.