International reserves (reserve assets) are those foreign (external) highly liquid assets of country that are readily available to and controlled by monetary authorities (central bank) for meeting balance of payments financing needs, for intervention in exchange markets to affect the currency exchange rate. International reserves also can be used to maintain confidence in the national currency and serving as a basic for external borrowing.
An asset is considered as a reserve if it meets the following criteria: assets must be claims on nonresidents (other than gold bullion); assets must be denominated and settled in convertible foreign currency; assets actually exist and are controlled by monetary authorities; assets can be converted into convertible foreign currency with minimal costs and in a minimal time period.
