Reserve Currency
A currency widely held by foreign central banks and used in international trade and finance, conferring an unusual privilege on the issuing country to run sustained current account deficits at low cost. The US dollar is the dominant global reserve currency, with the euro, yen, pound, and (to a lesser degree) renminbi occupying smaller shares. The reserve-currency role gives the US a structural buyer for its debt and lets it run deficits longer and at lower yields than other deficit countries, but it also constrains domestic policy choices in subtle ways.
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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