Reserve currency

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Reserve currency

A foreign currency held by a central bank or monetary authority for the purposes of exchange intervention and the settlement of intergovernmental claims.

Reserve Currency

A foreign currency held by a central bank or occasionally a major financial institution that may be used to settle international debts or transactions. A reserve may also be used to affect the exchange rate of the domestic currency. The most common reserve currency worldwide is the U.S. dollar, though the British pound, Japanese yen, and euro are also very common. See also: SDR.
References in periodicals archive ?
Each of the current third-largest reserve currencies, the Japanese yen and the pound sterling, accounts for only 4 percent of global central bank reserve allocation.
The most important user of US dollars as reserve currencies is China.
If the choice of reserve currencies were based on economic logic, sterling might have ended its reign in 1873, when a global depression set it reeling, or in the first decade of the 20th century, when there was rush from sterling to gold, or in the Great Depression of the early 1930s, when its value plummeted and Britain was forced to scrap the gold standard and float.
Therefore, I do not anticipate that SDRs could in the foreseeable future replace any of these reserve currencies," he pointed out.
Masafumi Yamamoto, head of foreign exchange strategy at the Royal Bank of Scotland, said talk about alternative foreign reserve currencies instead of the dollar has been used as a cue to sell the dollar.
It criticized the existing reserve currencies, including the dollar and pushed for the creation of supranational currency.
He claims that credit-based national reserve currencies, like the dollar, are inherently risky, facilitate global imbalances, and foster the spread of financial crises, but China's concerns may also be a bit more parochial.
Further, reserve currencies are issued by the governments of countries that are international financial centers.
Two of the main reasons for holding reserve currencies are for exchange rate intervention and for trade.
No major country followed the United Kingdom in devaluing; nonetheless, the devaluation of sterling brought into question the basic premise of the Bretton Woods system that par values of reserve currencies should be regarded as fixed.
The Chinese government has introduced a host of new measures to free the currency, making its intention clear: to make RMB a fully convertible currency and one of the major reserve currencies alongside the US dollar.
Every five years, the IMF reviews its basket of reserve currencies,

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