I guess I overall don’t understand entirely how currency works… that is, why is the US dollar the “reserve currency” for several nations and why would BRICS challenge that? And finally, what effect would that have on the US.
In: 7
1. The reserve currency means that a fledgling country’s currency can have a stable backing to it. It makes that country’s currency more legitimate
2. Other countries have an incentive to make their currency the reserve to drive up the demand for that currency and increase its apparent legitimacy across the globe.
3. For the US, if fewer people are using the US dollar means a lower value for the dollars in circulation.
Latest Answers