There are quite a lot of discussions on China's foreign reserve management mechanism recently. Lu Lei, deputy director of the State Administration of Foreign Exchange (SAFE) said that the reserve asset attributes require that the reserve management should adhere to the principle of materialization instead of institutionalization. It should have the ability to trade in the open market at a high frequency and focus on liquidity management. The growth and decline of reserve assets will affect the product competitiveness of the people and of the enterprises; it will also affect the allocation of asset categories and the choice of currencies, thereby influencing asset prices, currency stability and even financial stability. Therefore, reserve management should not be limited to the former but should focus on the latter.