To determine the best ratio of the following three options: 1. Selection of varieties In general, it is necessary to increase the reserves of hard currency as much as possible and reduce the reserves of soft currency.
But it must also be noted that more hard money is not always better.
How to combine hard and soft currencies can be examined and selected comprehensively from the long-term and short-term fluctuations by dialectical view and movement perspective.
2. Selection of exchange Rates for Reserve Currencies The monetary authorities of each country should make their choice according to the magnitude of changes in various reserves.
Generally speaking, the amount of currency reserves with small exchange rate fluctuations should be increased as much as possible, and the amount of currency reserves with large exchange rate fluctuations should be reduced.
3. Selection of the demand for reserve currency according to the country’s foreign trade structure and other financial activities of the reserve currency payment demand selection, that is, if the demand for a reserve currency is large, the reserve amount should be increased as much as possible;
The selection of reserve currencies is based on the demand for domestic intervention to maintain the stability of the domestic currency exchange rate.
The more a currency is used for intervention, the more reserves it needs;
Instead, reserve less.
