Dollars are used to settle around 40 percent of the total debt in the world
English Public
As a consequence of this, in order to conduct business, foreign banks require a significant amount of dollars. This became abundantly clear during the economic crisis that began in 2008. The overseas liabilities denominated in currencies other than the U.S. dollar held by non-American banks totaled $27 trillion. Out of the total, 18 trillion dollars was denominated in U.S. dollars. Because of this, the Federal Reserve of the United States was forced to increase the size of its swap line for dollars.
Dollars are used to settle around 40 percent of the total debt in the world
For more info...
https://oclnn.com/trade/why-the-us-dollar-is-the-global-currency/
That was the only way to prevent the financial institutions of the world from being completely depleted of their dollar reserves. The recent economic turmoil contributed to an increase in the dollar's circulation. In 2018, financial institutions in Germany, France, and the United Kingdom owned greater liabilities denominated in dollars than they did in their respective national currencies. In addition, the rules imposed on banks in order to forestall another financial crisis can result in a shortage of dollars. That is also a possibility in the event that the Federal Reserve decides to raise the fed funds rate.
This results in a lower money supply since it makes it more difficult and expensive to borrow dollars. Because of the strength of the dollar, governments are ready to keep it as part of their foreign exchange reserves. The purchasing of currencies by governments is a byproduct of their participation in international trade. They also get them from domestic enterprises and tourists who exchange them for the currency of the country they are visiting. Various governments choose to invest their reserves in various forms of foreign currency. Both China and Japan make a concerted effort to purchase the currencies of their most important trading partners. Both China and Japan count the United States as their most important trading partner for exports. They work to maintain their currencies at lower values relative to others in order to keep their export prices at competitive levels.
Dollars are used to settle around 40 percent of the total debt in the world
For more info...
https://oclnn.com/trade/why-the-us-dollar-is-the-global-currency/
That was the only way to prevent the financial institutions of the world from being completely depleted of their dollar reserves. The recent economic turmoil contributed to an increase in the dollar's circulation. In 2018, financial institutions in Germany, France, and the United Kingdom owned greater liabilities denominated in dollars than they did in their respective national currencies. In addition, the rules imposed on banks in order to forestall another financial crisis can result in a shortage of dollars. That is also a possibility in the event that the Federal Reserve decides to raise the fed funds rate.
This results in a lower money supply since it makes it more difficult and expensive to borrow dollars. Because of the strength of the dollar, governments are ready to keep it as part of their foreign exchange reserves. The purchasing of currencies by governments is a byproduct of their participation in international trade. They also get them from domestic enterprises and tourists who exchange them for the currency of the country they are visiting. Various governments choose to invest their reserves in various forms of foreign currency. Both China and Japan make a concerted effort to purchase the currencies of their most important trading partners. Both China and Japan count the United States as their most important trading partner for exports. They work to maintain their currencies at lower values relative to others in order to keep their export prices at competitive levels.
by gerryshown
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