[简答题]How many factors to explain the reserve holdings

参考答案: There are five key factors that explain reserve holdings. 　　 Economic size. To the extent that international transactions increase with economic size, reserves are expected to rise with population and real GDP per capita. 　　 Current account vulnerability. A more open economy is more vulnerable to external shocks, so greater trade openness would be associated with higher reserve holdings. Also, the larger the external shocks (say, export volatility), the higher the level of reserves. 　　 Capital account vulnerability. As with the current account, greater financial openness could be associated with higher crisis vulnerability and thus influence the demand for reserves. In addition, the greater the potential for resident-based capital flight from the domestic currency, the higher the level of reserves. 　　 Exchange rate flexibility. Greater flexibility reduces the demand for reserves, because central banks no longer need a large stockpile of reserves to manage a pegged exchange rate. However, many countries that have adopted more flexible.