Countries hold reserves for a number of reasons, including to weather economic shocks, pay for imports, service debts, and moderate the value of its own currency. What is a reserve currency?Ī reserve currency is a foreign currency that a central bank or treasury holds as part of its country’s formal foreign exchange reserves. Despite the concerns about the dollar’s power, many experts say it is unlikely that the greenback will be replaced as the leading reserve currency any time soon. Federal Reserve to act as the world’s lender of last resort during economic crises, such as the one triggered by the coronavirus pandemic. And the dollar’s role in many global transactions puts pressure on the U.S.
exports less competitive, resulting in trade deficits and lost jobs. Meet Vivek Ramaswamy, Republican Presidential Candidateīut some experts argue that dollar supremacy comes at a cost.
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