Dollar as reserve currency

Subject: Economy

Context:

Ever since China started pilot project on its Central Bank Digital Currency (CBDC), there has been speculations of possibility of China’s digital currency replacing the US dollar as the reserve currency of the world.

Concept:

• A reserve currency is a currency held in significant quantities by governments and institutions as a means of international payment and to support the value of national currencies.
• A large percentage of commodities, such as gold and oil, are priced in the reserve currency, causing other countries to hold this currency to pay for these goods.