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Thoughts about reserve currency...

csbrown28

csbrown28

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"If you want to be a net exporter, you have to own the foreign exchange of the other country. And nobody has your currency. So if you want your currency to be a reserve currency, you [the country] have to be a net importer. In the US we import and we pay in dollars, so that the rest of the world has those dollars....by running a trade deficit, they [the world] gets those dollars....Why isn't Yen a reserve currency? Big powerful country, 2nd largest in the world. Because they are a net exporter and so nobody has Yen, the world is short their [Japan] currency. So here is Europe that wanted to be a net exporter, which means that everyone is going to be net borrowed in Euros, while at the same time they want the Euro to be a reserve currency where everybody [the world] has Euros. Well you're talking about both sides of your mouth, it can't happen, you're just violating the accounting identity." - Warren Mosler

Discuss....
 
csbrown28 said:
"If you want to be a net exporter, you have to own the foreign exchange of the other country. And nobody has your currency. So if you want your currency to be a reserve currency, you [the country] have to be a net importer. In the US we import and we pay in dollars, so that the rest of the world has those dollars....by running a trade deficit, they [the world] gets those dollars....Why isn't Yen a reserve currency? Big powerful country, 2nd largest in the world. Because they are a net exporter and so nobody has Yen, the world is short their [Japan] currency. So here is Europe that wanted to be a net exporter, which means that everyone is going to be net borrowed in Euros, while at the same time they want the Euro to be a reserve currency where everybody [the world] has Euros. Well you're talking about both sides of your mouth, it can't happen, you're just violating the accounting identity." - Warren Mosler

Discuss....
Click to expand...

In order to be a reserve currency, it must have more value to others than other currencies.
 
fmw said:
In order to be a reserve currency, it must have more value to others than other currencies.
Click to expand...

No. Otherwise the CHF would be the world's reserve.
 
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