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NBER WORKING PAPER SERIES THE DOLLAR AND ITS DISCONTENTS Olivier Jeanne
NBER WORKING PAPER SERIES THE DOLLAR AND ITS DISCONTENTS Olivier Jeanne

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... remainder of the paper considers a variety of alternative monetary arrangements for this same world economy. In all models studied, the use of ‘money’ or ‘currency’ will be motivated by a constraint imposed on all tratders to the effect that goods can be purchased onIy with currency accumulated in a ...
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Reserve currency



A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency. People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they don't need to exchange their currency to do so.By the end of the 20th century, the United States dollar was considered the world's most dominant reserve currency, and the world's need for dollars has allowed the United States government as well as Americans to borrow at lower costs, granting them an advantage in excess of $100 billion per year. However, the U.S. dollar's status as a reserve currency, by increasing in value, hurts U.S. exporters.
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