Debit means an increase in assets or a decrease in liabilities; The corresponding concept is credit. Then in international finance, we can think that all transactions that lead to asset increase, debt decrease and foreign exchange outflow should be counted as debits. In essence, the increase of official foreign exchange reserves means that China's foreign exchange flows to other countries and is lent to other countries.
At this time, China bought each other's bonds (in fact, most of China's foreign exchange reserves are indeed US dollar bonds). Bond is a kind of financial asset. The increase in assets was debited. The balance of payments account adopts double entry bookkeeping, that is, each transaction is represented by two accounts with equal value and opposite directions. According to the practice of double-entry bookkeeping, whether it is physical assets or financial assets, the borrower represents the increase of assets held by the economy and the lender represents the decrease of assets held.
Debit accounts in the balance of payments account include: current account reflecting the actual imported resources; Financial items reflecting the increase of assets or decrease of liabilities. The items included are: items representing actual export resources; Financial items reflecting the decrease of assets or the increase of liabilities
What is foreign exchange?
The English name of foreign exchange trading is forex exchange, or FX for short. Foreign exchange transaction was originally produced with international trade, and it is also a tool of international bond-debt relationship. With the development of economy, foreign exchange trading has become an important financial product of the country. It is bigger than the stock market or any other market. It is one of the largest financial investment markets in the world. Therefore, the foreign exchange market attracts many traders, including beginners and professional investors. Foreign exchange is traded in currency pairs, such as Euro/USD or USD/JPY.