It means that it is the currency that is most widely used in international transactions. It is also held in significant quantities by central banks and other financial institutions as a reserve asset.
The U.S. dollar has served as the world’s reserve currency since the end of World War II, when it replaced the British pound as the dominant global currency.
The U.S. dollar’s role as the reserve currency is because of the strength and stability of the U.S. economy, as well as the fact that the U.S. dollar is widely accepted and trusted around the world. Further, the US government has never defaulted on its debt.
The U.S. dollar’s status as the world’s reserve currency gives the U.S. certain economic advantages, such as the ability to borrow at lower interest rates and the ability to influence global economic policy.
However, it also carries certain responsibilities, including the need to maintain the stability and credibility of the U.S. dollar.
As we reported recently, the US government will likely not have any issues with raising the debt ceiling. This also helps maintain confidence in the US economy at a time when inflation is up and there are global economic concerns.
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