Reserve Currency
Also called: global reserve currency, dollar hegemony, exorbitant privilege
A reserve currency is one central banks hold in their foreign exchange reserves and that global trade and debt are priced in — overwhelmingly the US dollar. The status confers what a French finance minister called an exorbitant privilege: the issuer can borrow cheaply in its own currency and run persistent deficits. It also imposes an obligation to supply the world with assets, which requires running those deficits indefinitely.
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