The determination of international reserve demand includes the following aspects:
1. Import scale: The larger the import scale, the greater the demand.
2. The fluctuation range of import and export trade (or balance of payments) balance: the size of the deficit directly affects international reserves, and the larger the size, the greater the demand for reserves; On the contrary, it is small.
3. Exchange rate system: A country with a floating exchange rate system can hold relatively few reserves.
4. Foreign exchange control: In countries with strict foreign exchange control, reserves can be relatively small.
5. Efficiency of international balance of payments automatic adjustment mechanism and adjustment policy: The higher the efficiency of these mechanisms and policies in adjusting international balance of payments, the smaller the reserve demand; On the contrary, the lower the efficiency of these mechanisms and policies in regulating the balance of payments, the greater the demand for reserves.
6. Opportunity cost of holding reserves: The higher the opportunity cost of holding reserves, the less reserves should be held.
7. Development degree of financial market: The more backward the financial market is, the greater the dependence on the government's own reserves to adjust the balance of payments.
8. International monetary cooperation: If a government has a good cooperative relationship with foreign monetary authorities and international monetary and financial institutions, and has signed more standby credit agreements for reciprocal credit, or if there is a deficit in the balance of payments, other monetary authorities can coordinate their intervention in the foreign exchange market, then the demand for domestic reserves will be less. On the contrary, the greater the government's demand for its own reserves.