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Reserve Currency

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Reserve Currency
A reserve Currency is a Currency which governments and international institutions are willing to hold in their gold and foreign-Exchange reserves and which finances a significant proportion of international trade.
    
It is a foreign Currency held by central banks and other major financial institutions as a means to pay off international Debt obligations, or to influence their domestic Exchange rate. The prerequisites for these two conditions are normally that the value of the Currency must be stable in relation to other currencies; the Currency is that of a country which holds an important share of world trade, there should exist an efficient foreign Exchange market in which the Currency may be traded.
    
The U.S. dollar is the primary reserve Currency used by other countries. The sterling was also a reserve currencies between 1945 and the early 1970s.  A very large percentage of commodities such as gold and oil are usually priced in U.S dollars, causing other countries to hold this Currency to pay for these goods. A large debate still continues about whether or not the U.S. dollar Will stay the main reserve Currency or if it Will shift over to the euro. Currently, the Swiss franc, the euro and the Japanese Yen have all been seen as reserve currencies. The US dollar remains the world's dominant reserve Currency.
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