The Dollar as the Worlds Reserve Currency Munteanu

The Dollar as the World’s Reserve Currency Munteanu Diana 1719 D

� The first U. S. dollar, as it is known today, was printed in 1914 upon the creation of the Federal Reserve Bank. Less than six decades later, the dollar officially became the world’s reserve currency. However, its ascendancy to the throne began not long after the ink was dry on that first printing.

Standing on Its Own as the World’s Reserve Currency As a result of the Bretton Woods Agreement, the U. S dollar was officially crowned the world’s reserve currency, backed by the world’s largest gold reserves. Instead of gold reserves, other countries accumulated reserves of U. S. dollars. Needing a place to store their dollars, countries began buying U. S. Treasury securities, which they considered to be a safe store of money.

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In 1944, delegates from 44 Allied countries met in Bretton Wood, New Hampshire, to come up with a system to manage foreign exchange that would not put any country at a disadvantage. It was decided that the world’s currencies couldn’t be linked to gold, but they could be linked to the U. S. dollar, which was linked to gold. The arrangement, which came to be known as the Bretton Woods Agreement, established that the central banks would maintain fixed exchange rates between their currencies and the dollar. In turn, the United States would redeem U. S. dollars for gold on demand. Countries had some degree over the currencies in situations where their currency values became too weak or too strong relative to the dollar. They could buy or sell their currency to regulate the money supply.

References �https: //www. investopedia. com/articles/fore x-currencies/092316/how-us-dollarbecame-worlds-reserve-currency. asp �https: //www. quora. com/What-are-someinteresting-topics-for-a-10 -15 -minuteeconomics-Power. Point-presentation �https: //www. thebalance. com/worldcurrency-3305931