Foreign exchange reserves

Assets, normally held by a central bank, that can be used in a financial crisis or to influence the country’s exchange rate. Central banks tend to hold their reserves in major currencies like the dollar or euro, as well as gold. Reserves were vital under the gold standard and other fixed exchange rate systems, since the central bank could sell the reserves and buy the domestic currency to support its price. In the modern era, the scale of daily currency trading is so great that it is hard for any country to hold enough reserves to combat the markets.