It refers to the country where the central bank buys assets and releases them accordingly.
Since it is a non-convertible currency, foreign capital needs to be converted into RMB before it can be put into circulation. In order to invest a large amount of foreign capital, the country needs to purchase it with its own currency, so “” is added to form foreign exchange funds.
In the narrow sense, foreign exchange refers to various means of payment expressed in foreign currency, generally accepted by all countries and used for international settlement of creditor’s rights and debts.
It must have three characteristics: payability (assets that must be expressed in foreign currency), availability (claims that can be compensated abroad) and convertibility (foreign currency assets that can be freely converted into other means of payment).
Foreign exchange, broadly defined, refers to all assets owned by a country that are expressed in foreign currency.
The definition of the IMF is: “Foreign exchange is the creditor’s rights held by the monetary authorities (central banks, monetary authorities, foreign exchange stabilization funds and the Ministry of Finance) in the form of bank deposits, Treasury bills, and short-term and long-term government securities that can be used at a time.”
There are four main ways to put in the central bank of China, which are relending, rediscount, financial borrowing overdraft and foreign exchange accounts.
To a great extent, foreign exchange funds have made Chinese policy makers change the target of monetary intermediation. The continuous growth of foreign exchange funds has also promoted the innovation to some extent.
The foreign exchange account has become one of the main channels of China’s basic money release, and it is also rising relative to the importance of other monetary release ways. In the future, the foreign exchange account will continue to play an important role in our money supply.