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 ?
A global reserve currency should have high liquidity, be a store of value, and should be able to see high fresh issuance of debt.
is going to be the world's primary reserve currency for .
It was only a question of time before the desirability of the dollar as the dominant global reserve currency would be questioned," observes David Woo, head of foreign exchange strategy at Barclays Capital in London.
My view and that is the view I have heard expressed here is that the dollar was likely to remain the principle reserve currency," the U.
As such, China finds itself concerned about the dollar since it is the world's primary reserve currency, not only in what pertains to the value of the treasury bonds that China holds, but also because of China's enormous reserves in U.
China was most specific, calling in March for the dollar to be replaced as dominant reserve currency by the IMF Special Drawing Right, SDR.
But sceptics question whether the SDR could ever replace the dollar as the world's leading reserve currency, for the simple reason that the SDR is not a currency.
Yet, this matter is not optional, as decision-makers in Washington may presume - the first international reserve currency is determined by subjective circumstances that reflect the economic significance of the country in question and the volume of its commercial exchange across the world.
IMF Managing Director Dominique Strauss-Kahn said Wednesday that talks on a new world reserve currency to replace the US dollar were "legitimate" and could take place "in the coming months," reported AFP.
Zhou Xiaochuan, Governor of the Bank of China, wants a new international reserve currency, one that is "disconnected from economic conditions and sovereign interests of any single country.
The dollar replaced the British pound as the world's reserve currency in the period following World War II, meaning that most countries were willing to accept payment in dollars, knowing that they were universally accepted as a secure store of value.
The euro is making a serious bid to displace the dollar as the global reserve currency chiefly because of the fact that Washington, despite its claim to be the capital of a free-market society, is more profligate in its spending and indebtedness than the overtly socialist governments of Europe.

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