Foreign exchange reserve

Definition

In a central bank's accounts, foreign exchange reserves are called reserve assets in the capital account of the balance of payments, and may be labeled as reserve assets under assets by functional category. In terms of financial assets classifications, reserve assets can be classified as gold bullion, unallocated gold accounts, special drawing rights, currency, reserve position in the IMF, interbank position, other transferable deposits, other deposits, debt securities, loans, company shares (listed and unlisted), investment fund shares and other financial contracts. There is no counterpart for reserve assets in liabilities of the international investment position. Usually, when the monetary authority of a country has some kind of liability, this will be included in other categories, such as "other investments". On a central bank's balance sheet, foreign exchange reserves are assets, along with domestic credit.