| a monetary reserve established by a country to provide funds for maintaining the official exchange rates of its currency by equalizing the buying and selling of foreign exchange. |
Exchange Stabilization Fund - ESF
Money available to the U.S. Treasury Department primarily used for participating in the foreign-exchange market in an attempt to maintain currency stability. It holds U.S. dollars, foreign currencies and special drawing rights.
Investopedia Commentary
The ESF allows the U.S. government to intervene in the forex market to influence exchange rates, usually the domain of the central bank, without affecting the domestic money supply. This money is also used to provide financing to foreign countries.
Related Links
What Are Central Banks?
The Federal Reserve (the Fed) Tutorial
What Is Money?
See also: Central Bank, Currency, Exchange Rate, Monetary Policy, Special Drawing Rights - SDR, U.S. Treasury
Also spelled: ESF