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 ?
The sole function of a currency board is to exchange the domestic currency it issues for an anchor currency at a fixed rate.
dollar as an external anchor currency, instead of choosing an internal anchor currency.
Europe experienced a similar development when, after the dismissal of the dollar-gold convertibility in the early 1970s, the Deutsche Mark started to act as the region's anchor currency and the Bundesbank took the upper hand in European monetary policy.
But what gets lost in Steil's revisionist retelling is the other great contribution of Bretton Woods--a system that constrained speculative capital and created a bias in favor of economic expansion, quite apart from whether the anchor currency was the dollar or Keynes's proposed bancor.
With capital controls largely abolished, we need to cope with the monetary policy of the anchor currency. Monetary policy needs to be tailored to adverse local conditions, i.e.
A country that keeps its currency on oxygen and fails to safeguard savings of masses has no right to remain as super power and keep its currency as anchor currency. Sliding dollar is not only a threat to US but whole world as it is being used as dominant reserve currency.
(d) the AMU would choose an anchor currency. Robert Mundell maintains that a monetary union would be best for East Asia and he suggests that this requires the choice of an anchor currency.
Perhaps a millionaire is an individual whose net wealth exceeds a sufficient amount of units of any currency when exchanged at a million units of the world's highest valued currency unit or the world's highest anchor currency unit.
But even if the renminbi were fully convertible, the economic arguments for changing the anchor currency are not well supported.
The next three chapters explore the prospects for East Asian economic integration, covering issues ranging from trade and economic diplomacy to the possibility of a monetary union with the yuan as the anchor currency and its implications for South Korea.
If the clients adopt an anchor currency independently, the joint probability that countries i and j use the currency of a common anchor k at time t is given by: