World's Currency Reserve

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What is that?

The World's currency reserve is like back up money that various countries store.  At the moment the world's currency reserve is dollars (yay for Americans!!!).

The world currency reserve is also used to purchase things like oil and gold. That means, when someone, or some company, or some country from anywhere in the world wants to buy oil or gold, they first have to convert their currency into dollars and then buy the items they want (not to mention paying a transaction cost).

Not bad. Each time the conversion occurs, America gets something. And when America wants to buy these items, they don't have to convert anything since its already in dollars. So the price is much lower for them.


You can read more about that at wikipedia.


In 2008 Some companies began to accept Euros rather than just dollars.

OPEC, a group of Arab countries that came together to regulate the price of their oil, are considering changing the currency reserve away from the dollars.

Now sure what's going on here...