travkohn on Nostr: Since the almighty greenback is the Global Reserve Currency (GRC), it is widely for a ...

Since the almighty greenback is the Global Reserve Currency (GRC), it is widely for a variety of purposes, including:

Settlement of Trade

Invoices, bills, etc are settled in dollars

Foreign exchange reserves for central banks
(think BoJ using USTs to prop up the dying Yen)

Lending for International Debt and Loans

IMF, World Bank, and others lend to sovereigns in dollars

Foreign currency exchange (Forex)

Most currency pairs are quoted against the dollar (e.g., EUR/USD, USD/JPY), making it central to global FX markets.

Outright Dollarization

Some countries use the U.S. dollar as their official currency (e.g., Ecuador, El Salvador) or alongside their local currency.

Remittances & Cross-Border Transfers

Dollars are widely used for sending money across borders, particularly in developing countries.

Safe-Haven Asset Feature

During crises, investors buy dollars for safety, causing global capital flows into U.S. assets like Treasuries.

Eurodollar Market (perhaps most important of all!)

U.S. dollars dominate SWIFT transactions, international bank reserves, and offshore banking systems- the offshore system is called the Eurodollar market.

USDs are lent into existence by foreign banks and used to finance global commerce. (Banks in Pakistan lending eurodollars to oil refiners in Iran for trade, for example)