Subject:
reserve currency A reserve currency, or anchor currency, is a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc.
This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currency with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others. (Wikipedia Feb 2010)
Devaluation threatens investors
By John Schroy, on March 30th, 2009 | 
In the financial crisis, the US Treasury took steps to protect the dollar as the world reserve currency, allowing AIG funds to pass through to foreign banks and engaging in currency swaps with foreign central banks.
However, the Pelosi-Reid Congress, by unprecedented domestic spending, has raised a real possibility of future high-level inflation. It will be up to US voters whether government finances return to a reasonable basis. The Federal Reserve cannot neutralize the negative impact an out-of-control Congress.
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