Reserve CurrencyBack to Glossary
A reserve currency refers to the currency that global central banks must necessarily hold ‘on reserve’ in order to purchase certain commodities that are priced in that currency and service debts that are also denominated in that currency. Before the Great Wars the world’s reserve currency was the pound sterling. As the British empire began to wane after WWII, the US rose to global dominance and has been the world’s reserve currency. Today, oil and gold are priced in US dollars and the US is also one of the largest debt markets in the world, making the US dollar essential for global trade and the most traded currency on the planet.
Find our Glossary interesting?
If you feel we’ve missed a term; let the Traders Expert team know and we’ll include it in our Glossary.