what is the relationship between the official settlement account and a country s exchange rate policy 
osas play a key role in implementing a country s exchange rate policy if the national currency is depreciating the central bank can use foreign currency reserves to purchase its own currency which increases demand and can help strengthen the exchange rate conversely if the currency is appreciating too much and impacting exports the central bank can sell foreign currency to weaken the exchange rate can official settlement account balances be used to gauge a country s economic stability the balance in the osa is closely linked to a country s balance of payments which tracks all its international transactions a surplus in the osa indicates that a country is earning more foreign currency than it is spending which can be a sign of economic stability in addition a healthy osa with ample foreign exchange reserves can act as a financial cushion during times of economic crisis perhaps meaning that entity is in greater economic health the bottom lineofficial settlement accounts are specialized accounts typically managed by a country s central bank or treasury department designed to record and manage international financial transactions these accounts play a pivotal role in the country s balance of payments accounting allowing for the tracking of inflows and outflows of foreign currency 