Why do countries need “foreign currency” reserves? Why not just buy things with their own currency?

Question

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

Answer 1

Foreign currency reserves allow a country to continue importing things it needs, like oil, even when its own economy is in crisis. They can try to stabilize their own currency by buying it back with foreign dollars. International loans and trade will require repayment in US dollars. 

Your bank card full of euros only works on foreign sites because your country has a strong economic partnership and a good exchange rate with foreign currencies. But a bank card full of Bolivianos might not be accepted anywhere outside Bolivia if the economy continues to be so volatile. 

Also, when you buy something online from a US shop, they’re not given Euros. Your bank exchanges it into dollars for you. A country trying to exchange a lot of currency at once can in itself tank their economy, so it’s quite delicate.