| any currency, as the U.S. dollar, used as a medium to settle international debts. |
| reserve currency n. Currency kept in reserve by a government for the paying of international debts. |
Reserve Currency
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.
Investopedia Commentary
Currently, the U.S. dollar is the primary reserve currency used by other countries. 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.
Related Links
What Are Central Banks?
What Is The Bank For International Settlements?
See also: Central Bank, Euro Currency, Federal Reserve System, Monetary Policy, USD