Reserve currency

A reserve currency is a foreign currency that is held by governments, central banks or other monetary authorities as part of their foreign exchange reserves.^[1] 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 the first half of the 20th century.^[2] However, by the middle of the 20th century, the United States dollar had become the world's dominant reserve currency.^[3]