– When one government does a business deal with another government, what do they use as an exchange of value?

Question

So for example, let’s say the British Government wanted to buy something from the US government. Well the U.K. wouldn’t exactly hoard a shed load of dollar bills “just in case” they fancied making a purchase from the US. By the same token, the US wouldn’t accept a she’s load of pound notes because they’d be useless to them (surely)

So what valuable asset do countries usually trade in?

In: Other

Answer 1

Money is just a proxy for valuable things such as gold in banks. So sometimes the payment between countries involves transferring actual gold.