# Reserve Currency

*Macro & Economy — Finicade finance glossary*

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.

**Also known as:** global reserve currency, dollar hegemony, exorbitant privilege

**Related terms:** [Exchange Rate](https://finicade.com/glossary/exchange-rate), [Trade Deficit](https://finicade.com/glossary/trade-deficit), [Balance of Payments](https://finicade.com/glossary/balance-of-payments), [Safe Haven](https://finicade.com/glossary/safe-haven), [Central Bank](https://finicade.com/glossary/central-bank)

Source: https://finicade.com/glossary/reserve-currency