What does foreign exchange account for money mean?

Funds outstanding for foreign exchange (Funds outstanding for foreign exchange) refers to the domestic currency that the national central bank purchases foreign exchange assets and releases accordingly. Since the renminbi is a non-freely convertible currency, foreign capital needs to be converted into renminbi before it can be used in circulation after the introduction of foreign capital. The country has to invest a lot of money for foreign exchange exchange, requiring the country to purchase foreign exchange with its own currency, thus increasing the “money supply”, thus forming foreign exchange Account for money.

Foreign exchange account

In a narrow sense, foreign exchange refers to various payment methods that are expressed in foreign currencies and are generally accepted by all countries and can be used for the settlement of international claims and debts. It must have three characteristics: payability (assets that must be expressed in foreign currencies), availability (must be credits that can be compensated abroad), and convertibility (must be foreign currencies that can be freely exchanged for other means of payment) assets).

In a broad sense, foreign exchange refers to all assets that a country has in foreign currencies. The International Monetary Fund (IMF) defines this as: “Foreign exchange is the monetary administration (central bank, currency management agency, foreign exchange stabilization fund and Ministry of Finance) in the form of bank deposits, Ministry of Finance treasury bills, long and short-term government securities, etc. The remaining claims that can be used when the balance of payments is in deficit.”

Generally speaking, there are two statistical standards, one is the monetary authority (or central bank), and the other is the financial institution. Since financial institutions include the central bank, the latter includes the former, and the difference between the latter and the former can be regarded as the foreign exchange holdings of financial institutions other than the central bank.

To give a simple example, suppose that the central bank only conducted 3 transactions in the past:

In 2001, the central bank purchased 100 million US dollars in foreign exchange in the foreign exchange market and paid 830 million yuan;

In 2010, the central bank purchased 100 million US dollars of foreign exchange in the foreign exchange market and paid 680 million yuan;

In 2015, the central bank sold 100 million US dollars of foreign exchange in the foreign exchange market and recovered 640 million yuan.

At the end of 2015, the central bank’s foreign exchange reserves were 100 million U.S. dollars, and the foreign exchange account was (8.3+6.8-6.4=) 870 million yuan.

From the above example, we can see that foreign exchange reserves measure the external purchasing power of the central bank, while foreign exchange reserves measure the liquidity of the renminbi that the central bank puts into the country to obtain this purchasing power. This is actually the base currency. issued.

The inability of foreign exchange holdings to correspond to the scale of foreign exchange reserves is mainly due to the following three reasons:

(1) As in the above example, foreign exchange reserves reflect the cost of RMB when acquiring foreign exchange assets, and foreign exchange reserves are foreign exchange assets denominated in US dollars at the time of statistics.

(2) The foreign exchange reserves are not only the U.S. dollar. There are also Euros and Japanese Yen. The exchange rate changes of these foreign exchanges relative to the U.S. dollar make the foreign exchange reserves denominated in U.S. dollars fluctuate. For example, in the past few years, the euro and the yen have depreciated against the dollar, even if the central bank does nothing, its dollar-denominated foreign exchange reserves will also decrease.

(3) Foreign exchange reserves are for foreign investment, and there are gains from foreign investment (of course it may also be a loss). These are not reflected in foreign exchange holdings, but reflected in foreign exchange reserves.

Foreign exchange account data query

Regarding the inquiry of foreign exchange holdings data, the Central Bank will announce the latest foreign exchange holdings data. You can log on to the central bank’s official website for inquiries. In addition, you can also log in to the official website of a large financial institution or the official website of a large financial portal for inquiries.