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Foreign exchange, called foreign currency in English, is a creditor's right held by monetary management organs (central bank, monetary management institution, foreign exchange stabilization fund and Ministry of Finance) in the form of bank deposits, treasury bonds and long-term and short-term government securities. Can be used when the balance of payments is in deficit.
Including foreign currency, foreign currency deposits, foreign currency securities (treasury bonds, treasury bonds, corporate bonds, stocks, etc.). ) and foreign currency payment vouchers (bills, bank deposit vouchers, postal savings vouchers, etc.). China ranks first in the foreign exchange reserves of governments all over the world. The United States, Japan, Germany and other countries have a large number of private foreign exchange reserves, and the overall foreign exchange reserves of the country are much higher than that of China.
Foreign exchange refers to all assets expressed in foreign currency. It refers to the flow of money between countries and a specialized commercial activity of exchanging one country's currency for another country's currency to pay off international creditor's rights and debts.
In fact, it is the creditor's rights held by the monetary management authorities (central bank, monetary management institutions, foreign exchange stabilization fund and Ministry of Finance) in the form of bank deposits, treasury bonds, long-term and short-term treasury bonds, etc. Can be used when the balance of payments is in deficit. Freely convertible foreign exchange is the most used foreign exchange in international settlement, which can be bought and sold freely in the international financial market, can be used to pay off creditor's rights and debts in international finance, and can be freely converted into currencies of other countries. Such as US dollars, Hong Kong dollars and Canadian dollars.
Limited freely convertible foreign exchange refers to foreign exchange that cannot be freely converted into other currencies or paid to a third country without the approval of the issuing country. According to the regulations of the International Monetary Fund, all currencies with certain restrictions on international current payments and capital transfer are restricted freely convertible currencies. More than half of the national currencies in the world are limited convertible currencies, including RMB.
Different from trade foreign exchange and non-trade foreign exchange, financial foreign exchange belongs to a kind of financial asset foreign exchange, such as inter-bank trading foreign exchange, which is neither derived from tangible trade nor intangible trade, nor used for tangible trade, but used for the management and manipulation of various currency positions.