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A [[reserve currency]] is a widely accepted currency held by central banks and financial institutions for international transactions, investments, and to stabilize their own currencies.
A [[reserve currency]] is a widely accepted currency held by central banks and financial institutions for international transactions, investments, and to stabilize their own currencies.
A financial crash triggered by a loss of confidence in the [[US dollar]] as the world's reserve currency would lead to a collapse of the [[US Treasury]] market. Higher Treasury yields would raise [[US government]] borrowing costs, worsening fiscal sustainability concerns and feeding back into confidence loss. Reserve managers and private investors would [[diversify]] into [[gold]], [[euro]], [[yuan]], and potentially digital currencies. Global trade and foreign exchange settlement invoicing would shift toward euro, yuan, or regional currencies. Long-standing network effects of dollar dominance begin to erode, making international financial transactions more inefficient.
[[Category:Finance]]
[[Category:Finance]]