Not so long
ago the dollar was the world's only reserve currency. Everything else was one
(or several) steps down in terms of safety and liquidity, and major financial
institutions acted accordingly, accumulating dollars for the risk-free parts
of their portfolios. Global demand for dollars was, as a result, effectively
infinite, which meant the US could borrow whatever
it wanted, secure in the knowledge that the Treasury bonds it created would
find willing buyers.
But quietly,
over the past couple of decades, the dollar has been joined at the top by the
euro, yen, pound sterling and Swiss franc. And now the list of legitimate
reserve currencies has expanded to include Canadian and Australian dollars: More>>
