Foreign Exchange Reserves

Foreign Exchange Reserves (Glossary)

Category: Economics and Finance

Definition

Noun.

Center are foreign money, gold and other international reserve assets held by banks to facilitate international trade, control exchange rates and safeguard against economic crises.

Origin

The term entered Turkish from the French word "réserve", which means "storage, preservation or accumulation". In English economic literature, the phrase "foreign exchange reserves" is used as common.

Applications

• Economics: Foreign exchange reserves are a key concept in economic stability and international trade policy.
• Finance: The concept of reserves is frequently used to mitigate the effects of financial crises and ensure liquidity management.
• Monetary Policy: Foreign exchange reserves are a critical tool in the planning and implementation of monetary policy.

Example Sentences

• The Central Bank aims to enhance confidence in international markets by increasing its foreign exchange reserves.
• Low foreign exchange reserves can negatively affect a country’s capacity to service its external debt.
• Foreign exchange reserves serve as a buffer against global economic shocks.

Submeanings and Related Meanings

• Gross Foreign Exchange Reserves: Refers to the total amount of foreign exchange assets.
• Net Foreign Exchange Reserves: The amount obtained by subtracting external liabilities from gross foreign exchange reserves.
• Gold Reserves: A type of asset that forms part of foreign exchange reserves and typically retains its value during economic crises.

Related Terms

• Central Bank
• Exchange Rate
• Monetary Policy
• International Reserves
• Gold Stocks