Reserve currency

A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international transactions, international investments and all aspects of the global economy. It is often considered a hard currency or safe-haven currency.

The United Kingdom's pound sterling was the primary reserve currency of much of the world in the 19th century and first half of the 20th century.[1] However, by the middle of the 20th century, the United States dollar had become the world's dominant reserve currency.[2] The world's need for dollars has allowed the United States government to borrow at lower costs, giving the United States an advantage in excess of US$100 billion per year.[citation needed]

The US 100-dollar bill, the world's most recognizable reserve currency in physical form
Currency symbols of the four most widely held reserve currencies, L-R: United States dollar, Euro, Japanese Yen, Pound Sterling
  1. ^ Cite error: The named reference Schenk_2009 was invoked but never defined (see the help page).
  2. ^ "The Federal Reserve in the International Sphere", The Federal Reserve System: Purposes & Functions, a publication of the Board of Governors of the Federal Reserve System, 9th Edition, June 2005

From Wikipedia, the free encyclopedia · View on Wikipedia

Developed by Nelliwinne