Reserve currency is a foreign currency, controlled by central banks of relevance countries and other major financial institutions with the purpose to pay off international debts, and also make an impact on their domestic exchange rate. Commodities like gold and oil are priced in the reserve currency, so that other countries pay for these goods with reserved currency.
The euro as a reserve currency: a challenge to the pre-eminence of the US dollar? By Gabriele Galati, Philip D. Wooldridge, Bank for International Settlements. Monetary and Economic Dept (published by Bank for International Settlements, Monetary and Economic Dept., 2006)
Commodity reserve currency By Elmer Meredith Harmon (published by Columbia University Press, 1959)
In the year of 2011, US dollar used as primary reserve currency by other countries. So as a consequence, the policy of United Sates are closely monitored by other foreign countries, so that they can get the knowledge of the values of their reserves, and to make sure that it is not adversely affected by inflation.
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