International Reserve and Official reserves

International Reserves (also called Official reserves or FX reserves) in a hard-and-fast sense are only the foreign currency bank deposit and bonds held by central banks and monetary authorities. Nevertheless, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it’s more accurately termed official international reserves or international reserves. These are assets of the central bank concealed a different reserve currencies, mostly the US dollar, and less the euro, the UK pound, and the Japanese yen, and accustomed back its liabilities, e.g. the local currency issued, and the various bank reserves deposited with the central bank, by the government or financial institutions.

Official international reserves, the means of official international payments, formerly consisted only of gold, and occasionally silver. But under the Bretton Woods system, the US dollar functioned as a reserve currency, so it too became part of a nation’s official Foreign exchange reserves assets. From 1944-1968, the US dollar was convertible into gold through the Fed, but after 1968 only central banks could convert dollars into gold from official gold reserves, and after 1973 no individual or institution could convert US dollars into gold from official gold reserves. Since 1973, no major currencies have been convertible security into golden from official gold reserves. Individuals and institutions must now buy gold privately markets, just like other commodities. Even though US dollars and other currencies are no more convertible security into gold from official gold reserves, they still can function as official international reserves.

Characteristics of international reserves

Holders of official

As an international reserve asset that must be the central monetary authority and control to be used directly, such direct “control” and “use” can be seen as the central monetary authority of a country a “privilege.” Non-financial institutions, enterprises and private holdings of gold, foreign exchange and other assets can not be counted as international reserves. This feature is known as the international reserves of official reserves, but also to international reserves and international liquidity distinction.
Free convertibility

As an international reserve asset that must be free to exchange with other financial assets, compared to fully reflect international reserve assets. Lack of free convertibility, the value of reserve assets can not be achieved, the international reserve assets that can not be generally accepted, will not be able to cover the balance of payments deficit and to play other roles.

Adequate liquidity

As an international reserve asset that must always be able to use the assets, such as stored in the bank’s current foreign exchange deposits, securities, etc. When a country’s balance of payments imbalances or fluctuations in exchange rates is too large, you can use these assets to balance the international balance of payments or foreign exchange market intervention to maintain the local currency exchange rate stability.
General acceptance

That as an international reserve asset, must be able to generally recognized and accepted around the world use. If a financial asset only in a small area or region is accepted, use, though it also features may convertibility and full mobility, still can not Chengweiguoji reserve assets.