I was reading about Bolivia running out of US Dollars and the government is shitting their pants.
Why is this a problem?
I don’t have any US dollars and I’m fine. If I buy something from an American website, I don’t need US dollars. I only have Euros in my bank account. I will use my Euro bank card to buy something from the American website.
Same if I buy something from a Japanese website. I don’t need Japanese Yen. I just use my bank card.
I can survive my entire life without worrying about having “foreign reserves”.
So why do countries like Bolivia need foreign reserves to buy some oil or whatever?
In: Economics
If Denmark bought some stuff from Japan and paid Japan in Krone, what’s Japan going to do with all that Krone? Try to buy from America with Krone? Pay their Japanese civil servants with Krone? It’s not like it gets automatically changed into Yen, that’s just a neat little trick your bank does behind the scenes for you *because* they either have reserves or can buy from someone who does.
Japan *could* try to get the money exchanged through a private company, but it’s going to be cheaper and easier for everyone if Denmark keeps their own reserve of Yen and pays in that
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